On December 10, data released by the U.S. Bureau of Labor Statistics showed that job openings in October edged up slightly to 7.67 million from 7.66 million the previous month, surpassing economists' median expectations. The release of these figures was delayed due to the U.S. government shutdown. While job openings increased in October, the rise was primarily driven by a few sectors, including retail, wholesale trade, and healthcare—the latter being the largest contributor to employment growth this year.
Meanwhile, the JOLTS report indicated that layoffs climbed to 1.85 million in October, the highest level since early 2023, with the accommodation and food services sectors bearing the brunt. This divergence across industries suggests some employers are adjusting to higher cost environments, influenced partly by U.S. trade policies and persistent economic uncertainty. Other data also pointed to an uptick in layoff announcements.
Separately, Goldman Sachs noted that markets widely expect the Federal Reserve to cut interest rates by 25 basis points for the third consecutive time at its December FOMC meeting, lowering the federal funds rate target range to 3.5%-3.75%. However, this rate cut is anticipated to come with a "hawkish" signal, indicating a higher threshold for further easing. Goldman Sachs emphasized that the rationale for the cut remains solid. On the employment front, job growth continues to lag behind labor supply expansion, with the unemployment rate rising for three consecutive months to 4.4%. Multiple indicators of labor market tightness have weakened, and alternative data suggests layoffs have recently begun to rise, introducing new downside risks.
Regarding inflation, tariffs have contributed approximately 0.5 percentage points to price pressures. Excluding tariff effects, core PCE inflation has declined to around 2.3% this year and is projected to ease further to 2% by the first half of 2026. Even including tariffs, core PCE inflation could drop to 2.2% by late 2026, signaling sustained disinflationary trends.
Key data to watch today include the revised U.S. Q3 unit labor costs and Q4 employment cost index. Additionally, the Bank of Canada's interest rate decision later in the day warrants close attention.
**Dollar Index** The dollar index edged higher yesterday, supported by short-covering and expectations of a hawkish Fed stance. Positive U.S. economic data also lent support. The index now hovers near 99.20, with resistance at 99.70 and support at 98.70.
**EUR/USD** The euro dipped slightly amid dollar strength, trading around 1.1620. Robust U.S. data and Fed expectations weighed on the pair, though solid German economic figures and tempered ECB rate-cut speculation limited losses. Resistance is seen at 1.1700, with support at 1.1500.
**GBP/USD** Sterling fell to a four-day low near 1.3300, pressured by a stronger dollar and growing expectations of Bank of England rate cuts. Resistance lies at 1.3400, while support holds at 1.3200.
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