The main event is the US employment report for December. We expect total payrolls to show a gain of 195,000 in December, which is below consensus expectations of 240,000. The main reason for our below-consensus call is that we expect some payback from the strong November gain of 321,000. Further, the decline in the ISM manufacturing index also suggests some cooling in job growth.
We expect the unemployment rate to remain unchanged at 5.8%, as we look for a rise in the labour force to compensate for robust employment. Hourly earnings should also be monitored closely, as this is one of the key indicators for judging how much the US labour market is tightening. Recently there have been signs of rising wage growth after a long period of low wage pressure, as hourly earnings increased 0.4% in November.
In Germany, industrial production data for November are due for release. We expect the data to support our view that the recovery in the euro area is gaining momentum, as was also evident in yesterday’s euro-area retail sales data.
Three Fed members will speak on the economic outlook today (Evans, Lacker and Kocherlakota). With the upcoming rotation of voting rights at the January FOMC meeting, Evans (dove) and Lacker (hawk) will become voting members, while Kocherlakota (dove) will lose his voting right.
Swedish industrial production.
Read the full report: FX Daily