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Cleveland Fed President Beth Hammack made it clear today that she sees significant risks in cutting interest rates further while inflation remains above target. Easing policy to cushion the labor market, she argued, risks "prolonging this period of elevated inflation" and could further fuel "risk-taking" in an already buoyant financial environment.

With stock prices firm and credit flowing freely, financial conditions are “quite accommodative,” she noted, making additional monetary support potentially counterproductive.

Hammack also warned that lowering short-term borrowing costs could distort asset pricing and credit risk signals. Such distortions, she said, might leave the economy exposed to a sharper downturn late.

She pushed back against the idea that a rate cut would act as “insurance” for the labor market, saying policymakers must recognize that such insurance could come "at the cost of heightened financial stability risks”.

Markets

US investors today for the first time in a long while could prepare for, admittedly flawed, first class official US data guiding trading, including challenging their assessment on Fed policy. (Outdated) US September payrolls data were the actor in case. After the October 29 hawkish Fed rate cut, US bond yields ahead of the report had arrived near the topside of short-term trading ranges (10-y 4.05%/4.16%; 2-y 3.52%/3.63%). At least a big minority of Fed governors in the meantime indicated great cautions/reluctance to ‘unconditionally’ further bring the policy rate to a neutral level. Inflation was still expected to stay above the target for quite some time to come while visibility on the heath of the labour market was low with few really alarming indications. US money markets had reduced the probability of a December rate cut to 25-30% in the run-up to the payrolls release. Unfortunately for markets, the first report in two months and a halve didn’t bring clear message for the December 10 policy meeting. The US economy in September added a stronger than expected 119k jobs (was -4k in August). The unemployment rate rose from 4.3% to 4.4%, but this was mainly due to a rise in the labour force/participation rate. Wage data (AHE 0.2% M/M and 3.8%) was very close to expectations. This also applies to the restart of the publication of (more timely) weekly jobless claims (220k week ended Nov 15). The reports won’t force highly divided FOMC members toward some kind of consensus view. As an illustration, Cleveland Fed president Hammack (one of the Hawkish members) repeated that cutting interest rates now risks prolonging this period of inflation and could encourage risk taking in financial markets. US yields in hesitant trading ceded 1-3 bps across the curve in minor steepening move. Little spill-over effects from the US data to European yields’ markets. German yields continue cautiously grinding north (2-y + 1 bp, 30-y +3 bps). A mildly positive US jobs report also supports the ‘post-Nvidia’ equity rebound as a big positive earnings surprise released after the close of the US markets yesterday eased fears on an ‘AI-bubble’. The EuroStoxx 50 after recent correction regains 1.2%. The US equities open between 1.2% (Dow) and 2.0% (Nasdaq) higher.

On FX, the dollar is shifting into a lower gear after yesterday’s (partially USD/JPY inspired) rally on a positive risk sentiment and a still open debate on December Fed easing. DXY at 100.1 holds near the 100.25/36 resistance/ST highs. EUR/USD (1.154) stays north of the 1.15 big figure, but the picture remains a bit unconvincing. The yen (USD/JPY 157.5) and Japanese bonds remain in the defensive as the government is preparing a JPY 21.3 trillion ($ 135 bln) stimulus package, raising further questions on fiscal sustainability (but to some extent also on room for the BOJ to further normalize policy). Sterling regains modest ground with EUR/GBP testing the 0.88 barrier as markets are looking forward to further details on next week’s budget.

News & Views

The Norges Bank released its quarterly expectations survey (Q4) in which it questions economists, social partners, business leaders and households. Economists and social partners expect goods and services inflation 12 months ahead to be 2.8% (from 2.8% & 2.7%). Business leaders and households expect stronger short term price pressure at respectively 3.7% (from 4%) and 3.9% (unchanged). Expected annual wage growth is seen in the 4%-4.5% range (from 4.3%-4.4%) with the exception of households who estimate it lower at 2.9% (from 3.2%). 31.7% of business leaders expect profitability of their own company to improve over the next 12 months (30.3% in Q3 survey), 37.8% expects it to remain unchanged (from 38.2%) and 27.6% sees it weakening (from 28.8%). Today’s survey won’t alter the Norwegian central bank’s plans to implement a long rate pause at the current 4%. Norwegian money markets only discount a 37% probability of a 25 bps rate cut between now and the end of Q1 2026. EUR/NOK is going nowhere at 11.73.

• Belgian consumer confidence climbed further in November, hitting the highest level since October 2021 (2 from 0). All indicators signaled an improvement. At the aggregate level, there was a slight improvement in expectations concerning the economic situation in Belgium (-26 from -27), and in addition, a continued weakening of fears about unemployment (-10 from -6), following the sharp decline seen in October. On a personal level, households are more optimistic about their own financial situation (0 from -2), and their expectations about their capacity to save hit a new peak for the year (26 from 23). Belgian business confidence will be published next Monday.

Non-farm employment increased by 119k in September, ahead of Bloomberg's consensus forecast of 54k. Job gains for the prior two months were revised lower by a total of 33k.

• Over the past three months, non-farm payrolls averaged 62k jobs, below the twelve-month average of 109k.

Private payrolls rose 97k – up from 18k reported in August – with nearly all the gains concentrated in health care & social assistance (+57k) and leisure & hospitality (+47k). Meanwhile, transportation & warehousing (-25k), professional & business services (-20k), manufacturing (-6k) and mining & logging (-3k) all shed jobs. Federal hiring (-3k) was also lower on the month, though this was more than offset by a decent gain in state & local (+25k) hiring.

In the household survey, the labor force (+470k) shot higher, eclipsing a smaller gain in civilian employment (+251k), pushing the unemployment rate up 0.12 percentage points to a new cyclical high of 4.4%. The labor force participation rate ticked up to 62.4% (from 62.3%).

Average hourly earnings (AHE) rose 0.3% month-on-month (m/m) – a tick slower than in August. On a twelve-month basis, AHE held steady at 3.8%.

Key Implications

Non-farm payrolls surprised to the upside in September, with private sector hiring rising at its fastest clip in five months. However, jobs gains remain narrowly concentrated, and there's mounting evidence to suggest that trade exposed sectors like manufacturing and transportation & warehousing are increasingly feeling the pain from higher tariffs.

Given the slate of alternative private sector labor market data released since September, this morning's employment report was dated even before its release. Unfortunately, it will be another month before the next employment report, as the Bureau of Labor Statistics announced yesterday that it won't be releasing the October report and the release of the November figures has been delayed until December 16th. This will come after the FOMC's next meeting on December 10th, which almost guarantees that the Fed will skip its next meeting to better assess the backflow of economic data.

Daily Pivots: (S1) 155.85; (P) 156.52; (R1) 157.82; More...

Intraday bias in USD/JPY remains on the upside for 158.85 key structural resistance, and then 161.8% projection of 146.58 to 153.26 from 149.37 at 160.17. On the downside, below 156.45 minor support will turn intraday bias neutral and bring consolidations, before staging another rise.

In the bigger picture, current development suggests that corrective pattern from 161.94 (2024 high) has completed with three waves at 139.87. Larger up trend from 102.58 (2021 low) could be ready to resume through 161.94 high. Decisive break of 158.85 structural resistance will solidify this bullish case and target 161.94 for confirmation. On the downside, break of 150.90 restiveness turned support will dampen this bullish view and extend the corrective pattern with another falling leg.

Daily Pivots: (S1) 0.8006; (P) 0.8036; (R1) 0.8087; More…

Intraday bias in USD/CHF remains on the upside for the moment. Rise from 0.7877 is seen as a leg in the corrective pattern from 0.7828 low. Further rally would be seen to 0.8123 resistance next. On the downside, below 0.7937 minor support will turn bias neutral first. Break of 0.7877 will bring retest of 0.7828 low.

In the bigger picture, long term down trend from 1.0342 (2017 high) is still in progress. Next target is 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382. In any case, outlook will stay bearish as long as 0.8332 support turned resistance holds (2023 low).

Daily Pivots: (S1) 1.1505; (P) 1.1551; (R1) 1.1584; More…

Intraday bias in EUR/USD remains on the downside for retesting 1.1467 first. Firm break there will target 1.1390, and then 38.2% retracement of 1.0176 to 1.1917 at 1.1252. For now, risk will stay on the downside as long as 1.1655 resistance holds, in case of recovery.

In the bigger picture, considering bearish divergence condition in D MACD, a medium term top is likely in place at 1.1917, just ahead of 1.2 key psychological level. As long as 55 W EMA (now at 1.1328) holds, the up trend from 0.9534 (2022 low) is still in favor to continue. Decisive break of 1.2000 will carry larger bullish implications. However, sustained trading below 55 W EMA will argue that rise from 0.9534 has completed as a three wave corrective bounce, and keep long term outlook bearish.

Daily Pivots: (S1) 1.3018; (P) 1.3087; (R1) 1.3129; More...

GBP/USD recovers mildly today as range trading continues. Intraday bias remains neutral and outlook is unchanged. Further decline is expected as long as 1.3247 support turned resistance holds. Break of 1.3008 will resume the fall from 1.3787, and target 138.2% projection of 1.3787 to 1.3140 from 1.3725 at 1.2831. Nevertheless, firm break of 1.3247 will suggest that fall from 1.3787 has completed as a corrective move already.

In the bigger picture, the break of 55 W EMA (now at 1.3182) is taken as the first sign that corrective rise from 1.0351 (2022 low) has completed. Decisive break of trend line support (now at 1.2824) will solidify this case and target 38.2% retracement of 1.0351 to 1.3787 at 1.2474 next. Meanwhile, in case of another rise, strong resistance should emerge below 1.4248 (2021 high) to cap upside to preserve the long term down trend.

Dollar strength faded mildly after the stronger-than-expected U.S. non-farm payroll report, as traders showed little appetite to extend the post-data rally. The muted reaction reflects a market that had already repriced aggressively after yesterday’s hawkish FOMC minutes, which pushed expectations for a December rate cut sharply lower. In that sense, much of the adjustment had already been done before today’s data even hit.

The jobs report merely reinforces the prevailing view: the Fed may not need to cut again in December, and policymakers can comfortably adopt a wait-and-see approach. Rather than reset expectations, the numbers simply validated what markets had already shifted toward following the minutes. With the pricing for a December cut already pared back, there was limited room for the Dollar to gain further on the headline beat alone.

At the same time, risk sentiment has flipped decisively into positive territory, driven by renewed AI enthusiasm after Nvidia’s earnings report. The resurgence in tech optimism has spilled across global equities and FX markets, providing fresh support to risk-sensitive currencies, even Sterling, and curbing defensive flows into Dollar.

Still, one feature of the FX markets that hasn’t changed this week is the extended and persistent weakness in Yen. Expectations that BoJ will delay its next rate hike — combined with rising global yields and Japan’s pro-stimulus policy backdrop — continue to leave the currency pinned at the bottom of the performance table.

For the week so far, Dollar remains the strongest performer, followed by Loonie and then Aussie. Yen sits firmly at the bottom, trailed by Swiss Franc and Kiwi. Euro and Sterling are positioned in the middle, with the Pound maintaining a slight edge thanks to improved risk appetite.

In Europe, at the time of writing, FTSE is up 0.62%. DAX is up 1.11%. CAC is up 0.90%. UK 10-year yield is down -0.015 at 4.584. Germany 10-year yield is up 0.014 at 2.731. Earlier in Asia, Nikkei rose 2.65%. Hong Kong HSI rose 0.02%. China Shanghai SSE fell -0.40%. Singapore Strait Times rose 0.15%. Japan 10-year JGB yield jumped 0.049 to 1.820.

US NFP beats expectation with 119k growth, but unemployment rate ticks up to 4.4%

U.S. non-farm payrolls surprised strongly to the upside in September, rising 119k versus expectations of 53k, more than making up for August’s downward revision from 22k to -4k. The stronger headline signals that hiring momentum hasn’t stalled as much as feared.

However, the details of the report were more mixed. The unemployment rate edged up from 4.3% to 4.4%, slightly above expectations. Though the increase came alongside a modest rise in participation from 62.3% to 62.4%, suggesting more workers entered the labor force.

Wage growth cooled, with average hourly earnings up only 0.2% mom, below the 0.3% consensus, bringing annual growth to 3.8% yoy. The average workweek held steady at 34.2 hours, pointing to no deterioration in hours worked.

Taken together, the data portray an economy that is still generating jobs but with softer wage pressures—likely welcomed by the Fed as it evaluates the necessity of another rate cut before year-end.

BoJ hawkish voice emerges as Koeda presses for further tightening

BoJ board member Junko Koeda delivered one of the clearest hawkish signals from the Bank in recent months, arguing that real interest rates remain “significantly low” and must be moved back toward "a state of equilibrium" to avoid “unintended distortions” later.

With Japan’s output gap hovering around zero and labor market tightness intensifying amid widespread staff shortages, she said in a speech that current economic backdrop justifies continued normalization. In her view, the BoJ should “continue to raise” the policy rate as economic conditions improve, adjusting monetary support in line with the broader recovery in activity and prices.

Koeda stressed that underlying inflation is running near 2%, but achieving the target sustainably requires the Bank to test how firmly "underlying inflation has remained stable or been anchored". That means looking beyond headline data to evaluate whether price momentum can hold as temporary factors fade.

Her message contrasted with recent political pressure urging caution on tightening, reinforcing the divide between policymakers seeking gradual normalization and government voices favoring prolonged accommodation.

PBoC stays on hold, but markets still see easing ahead

China kept its benchmark lending rates unchanged for the sixth straight month today, leaving the one-year Loan Prime Rate at 3.0% and the five-year rate at 3.5%. The decision was widely expected, as policymakers continue to balance the need to support the economy with the desire to avoid fuelling financial instability.

Despite the steady stance, markets remain convinced that monetary easing has merely been delayed, not abandoned. Expectations are building for a “dual cut” — both policy rates and banks’ reserve requirement ratio — in the first quarter of 2026.

A run of softer October activity data has strengthened that view. Exports contracted, retail sales slowed further, and the property-related drag has shown little sign of easing. Combined, these have heightened concerns that Q4 will bring more headwinds rather than signs of stabilization.

Adding to the pressure, new bank lending fell sharply in October as both households and businesses remained reluctant to take on fresh debt amid weak confidence and ongoing US-China trade tensions. Without a meaningful pickup in credit demand, Beijing may soon have little choice but to act more decisively to shore up activity in early 2026.

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.3018; (P) 1.3087; (R1) 1.3129; More...

GBP/USD recovers mildly today as range trading continues. Intraday bias remains neutral and outlook is unchanged. Further decline is expected as long as 1.3247 support turned resistance holds. Break of 1.3008 will resume the fall from 1.3787, and target 138.2% projection of 1.3787 to 1.3140 from 1.3725 at 1.2831. Nevertheless, firm break of 1.3247 will suggest that fall from 1.3787 has completed as a corrective move already.

In the bigger picture, the break of 55 W EMA (now at 1.3182) is taken as the first sign that corrective rise from 1.0351 (2022 low) has completed. Decisive break of trend line support (now at 1.2824) will solidify this case and target 38.2% retracement of 1.0351 to 1.3787 at 1.2474 next. Meanwhile, in case of another rise, strong resistance should emerge below 1.4248 (2021 high) to cap upside to preserve the long term down trend.

U.S. non-farm payrolls surprised strongly to the upside in September, rising 119k versus expectations of 53k, more than making up for August’s downward revision from 22k to -4k. The stronger headline signals that hiring momentum hasn’t stalled as much as feared.

However, the details of the report were more mixed. The unemployment rate edged up from 4.3% to 4.4%, slightly above expectations. Though the increase came alongside a modest rise in participation from 62.3% to 62.4%, suggesting more workers entered the labor force.

Wage growth cooled, with average hourly earnings up only 0.2% mom, below the 0.3% consensus, bringing annual growth to 3.8% yoy. The average workweek held steady at 34.2 hours, pointing to no deterioration in hours worked.

Taken together, the data portray an economy that is still generating jobs but with softer wage pressures—likely welcomed by the Fed as it evaluates the necessity of another rate cut before year-end.

Full US non-farm payroll release here.

Market Overview

The crypto market fluctuated slightly over the past day, ranging from a low of $3.02 trillion before the publication of the FOMC minutes and Nvidia’s earnings, to a peak of $3.16 trillion in the middle of the Asian session. However, it has now fallen back to $3.13 trillion, remaining almost unchanged for the day. The cryptocurrency market remains pessimistic, reacting eagerly to negative news and quickly deflating on positive news.

Bitcoin is trading just above $92K at the start of the day on Thursday. It has been hovering around this level for the last four days, but the last ten days have seen lower local lows (falling to $88.5K at the end of the day on Wednesday) and local highs, indicating a very aggressive sell-off. In such conditions, it is only a matter of days before the bears find stop-out levels, triggering a self-sustaining avalanche of selloffs.

ZEC remains a standout in the crypto market. The coin quickly recovered to the multi-year highs of $700 set earlier this month. This is quite impressive, considering the retreat of Bitcoin, which affects the entire crypto market. At the same time, we are wary of this growth, given its difficult legacy, as in previous bull markets, the rise of Zcash was a harbinger of the end.

News Background

The inflow into spot Solana ETFs in the US has continued for 16 consecutive trading sessions. During this time, $420.4 million has been invested in the funds. Canary’s recently launched XRP ETF in the US is also performing well, with an inflow of $276.8 million over three trading sessions; however, the bulk of the investment occurred on the first day of trading.

On November 18th, trading commenced on Solana-based spot exchange-traded funds from Fidelity (FSOL) and Canary Capital (SOLC) on the NYSE Arca and Nasdaq exchanges, respectively. Thus, five Solana spot ETFs are now trading in the US.

Aggressive bullish bets on the Bitcoin options market have been replaced by ‘clearly bearish’ positions, reflecting investors’ concerns about the market correction continuing, notes CoinDesk analyst Omkar Godbole. Short-term put options with strikes of $84,000-80,000 prevail.

Some experts attribute the current decline in the crypto market to a liquidity shortage amid the US government shutdown, rather than fundamental factors such as outflows from ETFs or a decrease in DAT company activity.