US Market Activity Stalls Ahead of NFP Release

Trading volumes in the US market were subdued on Thursday, as market participants braced for the upcoming Nonfarm Payrolls (NFP) report scheduled for release on Friday, January 10th.

The US Dollar Index (DXY) displayed modest gains amidst a generally tepid market environment. The observance of a national day of mourning for the passing of former President Jimmy Carter led to the closure of US markets. While this provided a brief respite from the week’s intense data releases, the anticipation of the NFP report continued to weigh on trading activity.

Economists anticipate a slight deceleration in US job growth in December. Wage growth is projected to remain relatively flat, potentially even declining on a monthly basis.

Exceeding these expectations in either wage growth or job additions could significantly disrupt market expectations for interest rate cuts in 2025. Strong wage growth would likely keep inflation expectations elevated, while robust employment figures would provide the Federal Reserve (Fed) with little incentive to ease monetary policy.

EUR/USD and GBP/USD Under Pressure

EUR/USD traded sideways near the 1.0300 level on Thursday, marking the third consecutive day of minor losses. This subdued trading activity reflects the market’s cautious stance ahead of the US jobs data. Disappointing Pan-European Retail Sales figures for November further dampened bullish sentiment for the Euro.

GBP/USD plunged to fresh 14-month lows, driven lower by weaker-than-expected UK Like-For-Like Retail Sales data for December. Sales contracted by a full 1% month-over-month, significantly undershooting market expectations for a modest recovery.

AUD/USD Remains Range-Bound

AUD/USD continued to trade within a narrow range around the 0.6200 level. While Australian Retail Sales rebounded by 0.8% month-over-month in November, this figure fell short of the anticipated 1.0% increase.

Additionally, the release of Chinese Consumer Price Index (CPI) inflation data for December, which met expectations at 0.1% year-over-year, further weighed on the Australian Dollar.

The easing inflation figure reflects the ongoing slowdown in the Chinese economy and casts doubt on expectations of a significant increase in Chinese consumer demand.