Germany’s inflation jumped to 2.6% in November – a nine-month high – reminding the ECB that price risks persist, ahead of its meeting on the 18th December. The rise was likely driven by holiday and fuel costs, and economists still see a broader disinflation trend continuing into 2025–26. Earlier in the day French inflation dropped more than expected.
USD held steady over Friday but suffered its worst week in four months. Holiday-thinned liquidity and a CME outage kept trading subdued. CAD was the standout performer after stronger-than-expected GDP.
*Daily move - against G10 rates as of 06:00 GMT, 01.12.25
** Indicative rates - interbank rates as of 06:00 GMT, 01.12.25
The latest Beige Book highlighted persistent softness in the US job market – a central indicator for Chair Powell. This appears to be the primary catalyst guiding the Fed toward a 25 bp rate cut at their upcoming 10th December meeting.
This week's ISM surveys may be mixed, but they are not being considered as factors driving the Fed’s monetary policy. The important data points are now outdated due to the shutdown, with some October releases (like CPI) missing entirely. Private hard data is noisy: layoffs may spike and weekly ADP could show weaker hiring; while core PCE for September has likely held at around 2.9%. USD trading is expected to be mixed without any clear drivers.
Euro-area inflation is expected to hold just above 2% in November before easing again in December – a trend that could push the ECB toward rate cuts next year despite its current reluctance. Wage growth likely slowed further in Q3. In Switzerland, CPI should remain at 0.1% YoY.
The UK calendar is looking light as well, and with GBP struggling to push key resistance levels, we could well see sterling come under pressure, with market perhaps repositioning themselves to weaken the currency.
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