European markets got off to a modestly positive start to the month, hitting 6-month highs before slipping back into the close, with the FTSE100 lagging after failing to push through the 7,600 level.

US markets underwent a little bit of a mixed session with the Nasdaq edging higher, while the S&P500 and Dow slipped back. US treasury yields also slid back with the 10-year yield sliding below its October lows to 3.5%.

Today’s European session will see the focus shift back to the US and the November jobs report.

Given Powell’s comments on Wednesday and yesterday’s PCE inflation data, and ISM numbers there might be a case for saying that today’s jobs report probably doesn’t matter that much.

We already know that we’ll see a 50bps rate hike in just under two weeks’ time, and then it's really a question of what comes after that.

A lot of questions have been raised as to what prompted a slight change of tack from Powell in contrast to what was some significant push back at the November press conference when he was told that stock markets were higher after the decision.

This more relaxed attitude may speak to some concerns about the extent of the economic weakness in the data that we’ve seen this week, which may in some part be helping to act as a drag on the inflation numbers.

Nonetheless, despite increasing evidence of a slowdown in the manufacturing sector, services sector jobs are still being created, while vacancy rates are still high.  

This week we saw weekly jobless claims fall back to 225k after a brief spike up to 241k.

In October non-farm payrolls came in at 261k, while the September jobs number was revised up to 315k. Slightly more disappointing was the fact that the unemployment rate edged up to 3.7%, while wage growth slowed to 4.7% from 5%.

The report also served to indicate that there was little sign of a wage price spiral despite still high levels of vacancies.

Despite the resilience being displayed in the US labour market there are rising pockets of concern.

The current earnings season reports are seeing the big tech companies letting people go in their thousands.

Amazon for example has announced the loss of over 10k jobs worldwide with more to come, while Meta recently announced the loss of 11k positions.

Twitter has also seen people leave the business, some of them voluntarily because they don’t want to work for new owner Elon Musk.

While not all these job losses are likely to be in the US there does appear to be a trend starting to build, although it is likely to take some time to filter through given that vacancy rates are still high.

On the flip side of the coin, it’s important to remember hiring trends tend to pick up in the lead up to Thanksgiving and the Christmas period on the back of temporary hires.

Expectations for November payrolls is for 200k jobs to be added, down from 261k, which would be the lowest number this year, in the same way this week's ADP report was a weak number. 

The unemployment rate is expected to tick higher to 3.8%, by virtue of a higher participation rate, while wage growth is forecast to remain subdued at 4.6%.

EUR/USD – pushed above the 1.0400 area and the 200-day SMA and appears to be on course for a move up to the June peaks at 1.0620, which is also the 38.2% retracement of the down move from 1.2350 to 0.9535.  

GBP/USD – broke up to the 1.2300 area, reversing 50% of the decline from the 1.4250 highs to the recent lows at 1.0342. This is likely to be a big obstacle to further gains towards 1.2760. Support comes in at the 1.2190 area and the 200-day SMA.  

EUR/GBP – sank back to the 200-day SMA and the 0.8540 area. This could act as support in the short term, with resistance now at the 0.8675 area. Below 0.8530 targets 0.8480.

USD/JPY – appears to be heading towards the 200-day SMA at 134.40 having broken below the 137.50 area. This should now act as resistance.

FTSE100 is expected to open 8 points lower at 7,550

DAX is expected to open 42 points lower at 14,448

CAC40 is expected to open 30 points lower at 6,724