Markets React to Mixed Data on Manufacturing and Labor Trends (09-13 December, 2024)

The U.S. Dollar Index ended flat, with employment and PMI data meeting expectations. Powell's dovish comments raised December's 25bps rate cut odds to 72%. The euro was volatile amid France’s government collapse and mixed PMI data, but EUR/USD closed higher on growing ECB rate cut speculation.

Gold traded flat as geopolitical risks remained limited, while silver gained on China stimulus hopes, outperforming gold. The gold-to-silver ratio narrowed to 84.40.

U.S. Treasury yields fell, with the 10-year at 4.17% and the 2-year at 4.15%.

Labor Market Indicators

JOLTS Job Openings (Oct):

Job openings climbed to 7.744 million, exceeding expectations. Gains in the services and tech sectors offset declines in government roles, reflecting a mixed but resilient labor market.

ADP Nonfarm Employment Change (Nov):

The private sector added 146,000 jobs, with a modest wage growth of 4.8%. Performance was uneven across industries, underscoring sector-specific dynamics.

Nonfarm Payrolls (Nov):

The economy added 227,000 jobs, surpassing forecasts, driven by strength in healthcare, hospitality, and government hiring. This robust performance signals resilience despite slowing economic growth.

Unemployment Rate (Nov):

The rate edged up to 4.2% from 4.1%, as labor force participation declined slightly to 62.5%. The increase may reflect more people re-entering the job market, offset by slower hiring in some sectors.

Average Hourly Earnings (Nov):

Earnings grew by 0.4% month-over-month to $35.61, maintaining a steady annual growth rate of 4%. Rising wages could support consumer spending despite broader economic uncertainties.

Initial Jobless Claims:

Weekly claims rose by 9,000 to 224,000, with the four-week moving average ticking up to 218,250. This slight increase hints at a cooling labor market as economic headwinds intensify.

Currencies

USD: The dollar closed flat despite dovish comments from Fed Chair Powell, which increased the likelihood of a December 25bps rate cut to 72%.
EUR: The euro experienced volatility, influenced by France's government collapse and mixed Eurozone PMI data. Rate cut speculation lifted the currency slightly by the week’s end.
GBP: The pound strengthened as stable near-term policy expectations outweighed concerns about potential Bank of England rate cuts in 2025.
JPY: The yen held steady, with rate hike probabilities rising to 60%. However, lingering doubts about wage growth sustainability tempered market enthusiasm.
CAD: The Canadian dollar fell to 1.403, nearing 2020 lows, weighed down by weak GDP data and renewed tariff threats from the U.S.
AUD: The Australian dollar dropped to $0.64, reflecting concerns over soft GDP growth and a potentially dovish stance from the Reserve Bank of Australia.

Commodities

Gold: Gold prices remained range-bound as geopolitical risks eased, though rising expectations for a Fed rate cut provided modest support.
Silver: Silver advanced, buoyed by hopes of Chinese stimulus, narrowing the gold-to-silver ratio to 84.40 and reinforcing its appeal as a speculative asset.
Oil: Brent crude settled at $72 as OPEC+ delayed planned production increases, balancing weaker demand forecasts with existing supply pressures.

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