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Australia’s labor market showed surprising resilience in November as employment grew by 35.6k, surpassing expectations of a 29.6k increase. The standout figure was the 52.6k gain in full-time jobs, offsetting a decline of -17k in part-time positions.

Unemployment rate fell significantly, dropping from 4.1% to 3.9%, well below the anticipated 4.2%. However, a slight dip in the participation rate, from a record high of 67.1% to 67.0%, tempered the optimism.

Employment-to-population ratio nudged up to 64.4%, matching levels from a year ago and maintaining its position 2.2% above pre-pandemic levels. Monthly hours worked showed no growth, indicating stability in workforce activity despite the overall gains in employment.

David Taylor, Head of Labour Statistics at the ABS, noted that an unusually high number of unemployed individuals transitioned into employment during November. This dynamic contributed to both the rise in job creation and the sharp fall in unemployment. Taylor also highlighted the role of population growth, which has bolstered labor supply and helped maintain the balance between employment growth and demographic expansion.

Full Australia employment release here.

Key Highlights

• Ethereum is eyeing a key upside break above the $4,000 resistance zone.
• ETH price is facing hurdles near a contracting triangle with resistance near $3,950 on the daily chart.
• Bitcoin price started a decent increase above $98,000 after a short-term downside correction.
• Gold prices extended gains and traded above the $2,700 zone.

Ethereum Technical Analysis

Ethereum started a fresh increase above $3,620 alongside Bitcoin. The bulls were able to pump ETH above the $2,650 and $2,720 resistance levels.

Looking at the daily chart, the price remained well above the 100-day simple moving average (red) and the 200-day simple moving average (green). There was a move above the 50% Fib retracement level of the downward move from the $4,092 swing high to the $3,475 low.

The price is now approaching a couple of key barriers. Immediate resistance is near a contracting triangle with resistance near $3,950 on the daily chart.

The triangle resistance is close to the 76.4% Fib retracement level of the downward move from the $4,092 swing high to the $3,475 low. The next major resistance is near the $4,000 level. A daily close above the $4,000 resistance zone could start another steady increase.

In the stated case, the price may perhaps rise toward the $4,200 level. The next stop for the bulls may perhaps be to a new all-time high.

On the downside, Ethereum might find support near the $3,580 level. The next major support is $3,500, below which the price could slide toward $3,475. Any more losses might call for a move toward the $3,200 level.

Looking at Bitcoin, there was a steady increase above the $98,000 level, and the price might continue to rise toward the $104,000 level.

Economic Releases

• US Initial Jobless Claims - Forecast 220K, versus 224K previous.
• US Producer Price Index for Nov 2024 (MoM) – Forecast +0.2%, versus +0.2% previous.
• US Producer Price Index for Nov 2024 (YoY) – Forecast +3.2%, versus +3.1% previous.

• ECB will meet on Thursday; markets expect a 25bps rate cut
• Doves are likely to push for a more aggressive rate cut
• President Lagarde’s negotiating skills will be put to the test
• The euro could suffer from a 50bps cut; muted impact likely from a smaller move

ECB will meet on Thursday

The ECB will hold its final meeting for 2024 on Thursday, one week before the Fed. Since the previous ECB gathering on October 17, several developments have occurred both domestically and externally.

The political turmoil continues in the eurozone’s two biggest economies. French President Macron remains under pressure to find a new PM and get the 2025 budget approved, and the German campaign for the February general election is fully underway. Meanwhile, President-elect Trump, in anticipation of his White House return on January 20, has already announced tariffs on the closest trade partners of the United States. Additionally, a regime change in Syria and a ceasefire in Lebanon have been added to the numerous changes on the geopolitical landscape.

Amidst these developments, the eurozone economy continues to experience a very soft patch with the PMI surveys painting a rather bleak picture. Considering the political situation, the burden once again falls on the ECB to keep the eurozone economy moving forward.

Four market moving factors on Thursday

Focusing on Thursday’s ECB meeting, there are four factors that could probably prove market moving. The size of the rate cut, the press statement, President Lagarde’s press conference, and the quarterly staff forecasts could increase the subdued volatility seen in euro/dollar over the past week.

In more detail, leading up to the ECB meeting, market expectations fluctuated between 25bps and 50bps rate cuts. Inflation has proven stickier than anticipated, with services inflation edging only a tad lower in November to 3.9%. Both rate cut options have merit, with the doves pushing for a stronger move ahead of Trump’s second term and highlighting the eurozone economy’s need for extra accommodation.

The December staff forecast could point to the future path of ECB rates, with the market focusing on any downward revisions to the 2026 inflation figures. In September, the headline and core inflation forecast for 2026 were kept stable at 1.9% and 2% respectively, thus keeping the door open to further rate cuts. Interestingly, the 2027 figure will be printed for the first time, with the market keen to see how far below the 2% target this forecast could fall. Similarly, another downward revision to growth rates for both 2025 and 2026 could play a role in the discussion about the size of the rate cut.

Additionally, the press statement and, more importantly, Lagarde’s rhetoric at the Q&A session could reveal the thinking process behind Thursday’s decision. A unanimous rate decision could be seen as a personal success for Lagarde, especially since the doves are really worried about Trump’s trade strategy.

Finally, the ECB has adopted a voting pattern in the past few years. Interestingly, on December 12 three hawks, including uber-hawks Nagel and Wunsch, will not have a vote, making Thursday’s gathering one of the most dovish meetings of 2024.

Two main scenarios for the ECB meeting

Putting everything together, investors are faced with two main scenarios:

Scenario 1: The ECB announces a 25bps rate cut, maintains dovish rhetoric and signals its readiness for more aggressive actions if incoming President Trump kicks off a new trade war. The doves will be moderately pleased, with the euro suffering just a tad. The initial disappointment from the lack of a more aggressive rate cut could cause a small upleg against the US dollar, but the move will most likely quickly reverse as President Lagarde holds the press conference.

Scenario 2: Concerned about the underlying economic conditions and the increased possibility of tariffs imposed by Trump on eurozone products, the ECB cuts rates by 50bps and adopts an even more dovish stance. Boosted by the quarterly forecasts showing inflation in both 2026 and 2027 comfortably below 2%, Lagarde comments that the rate cuts will continue, with the ECB deposit rate potentially being pushed well below the neutral rate in 2025.

In this scenario, the euro will probably suffer across the board, with euro/dollar dropping like a stone below the 1.0481-1.0571 range and potentially retesting the 1.0315 level.

• GBPCAD reversed from strong resistance zone
• Likely to fall to support level 1.8000

GBPCAD currency pair recently reversed down from the strong resistance zone located at the intersection of the upper daily Bollinger Band and the key resistance level 1.8100, which has been reversing the pair from September.

The downward reversal from this resistance zone stopped the C-wave of the previous ABC correction (B) from the end of November.

Given the strength of the resistance level 1.8100, GBPCAD currency pair can be expected to correct down to the next round support level 1.8000.

• EURUSD reversed from resistance zone
• Likely to fall to support level 1.0450

EURUSD currency pair recently reversed down with the long-legged Doji from the resistance area between the upper daily Bollinger Band, pivotal resistance level 1.0610 (former multi-month support from April) and the 50% Fibonacci correction of the downward impulse from the start of November.

The downward reversal from this resistance zone started the active minor downward impulse wave 3.

Given the strength of the aforementioned resistance area and the clear daily downtrend, EURUSD currency pair can be expected to fall further to the next support level 1.0450 (low of the earlier minor correction b).

• EURGBP posts another lower low
• Bearish sentiment endorsed by technical oscillators

EURGBP plunged to a new 33-month low of 0.8233 earlier today, creating a lower low in the medium-term outlook and endorsing the strong negative tendency. The momentum oscillators mirror the latest bearish move with the RSI diving towards the 30 level and the MACD strengthening its bearish steam below its trigger and zero lines.

More downside pressure could send traders to the 0.8200 round number, which is the low from March 2022, while below that the inside swing high from March 2016 at 0.8130 could prove to be a turning point barrier.

In the case of a rebound from the latest trough, immediate resistance could be the 0.8260 mark ahead of the 0.8300 handle. Even higher, the 20- and 50-day simple moving averages (SMAs) at 0.8307 and 0.8330 may pause the short-term increase.

All in all, EURGBP has been experiencing an aggressive selling interest since August, and a break above the descending trend line might not be enough to switch the current outlook to positive.

• EURJPY continues rebound from 2½-month low
• But meets obstacles in race towards 161 level

EURJPY has bounced back by more than 2% from the early December two-and-a-half-month low of 156.16. But the rebound has had a setback today, failing to get past the 20-day simple moving average (SMA) at 160.51.

The momentum indicators remain bullish, however, so there is a strong case for further gains in the short term. The stochastics have just entered the overbought region and a bearish crossover of the %K and %D lines doesn’t look imminent, while the RSI is steadily climbing below the 50 level.

If the bulls can overcome the immediate resistance at the 20-day SMA, the next hurdle is slightly higher at the 161.00 mark followed by the 162.00 level. Even higher, there’s likely to be some resistance around the 38.2% Fibonacci retracement of the July-August downleg at 162.41 and the 50-day SMA at 162.63. Clearing these obstacles would pave the way for the 200-day SMA at 164.70, which lies slightly below the 50% Fibonacci of 164.90.

However, for the medium-term picture to turn decisively bullish again, EURJPY would need to surpass the October 31 peak of 166.68.

On the other hand, if the positive momentum starts to wane and the price turns lower, there could be some support around 158.00 before attention turns to the December low of 156.16. A break beneath this trough would shift the medium-term outlook to bearish.

In a nutshell, EURJPY has a good chance of extending its rebound despite the several barriers ahead, but the medium-term trend will only be decided once there’s a climb above 166.68 or a drop below 156.16.

The Swiss franc is slightly lower on Wednesday. In the European session, USD/CHF is trading at 0.8845, up 0.19% on the day.

Swiss National Bank cut looms, but how much?

‘Tis the season of central bank decisions, with four major central banks making rate announcements this week. The Swiss central bank meets on Thursday and a rate cut has been fully priced, but what will the SNB do? The market has currently priced a 50-basis point cut at 60% and a modest 25-bp cut at 40%. Just one week ago, the odds were 70-30 in favor of a 50-bp cut.

Inflation declined by 0.1% in November and Switzerland hasn’t posted a gain in inflation since May. The signs of deflation support the case for a jumbo 50-bp cut. Still, central banks prefer modest rate moves in 25-bp increments and with the cash rate at just 1%, policymakers may opt for a 25-bp cut.

US inflation ticks higher, as expected

US inflation for November was a non-event for the US dollar, which has shown little movement today against the major currencies. Headline CPI ticked higher to 2.7% y/y up from 2.6% in October, while the core rate rose 3.3% y/y for a third straight month. Monthly, headline CPI rose from 0.2% to 0.3% and the core CPI rose was unchanged at 0.3%. The data matched expectations which explains the muted response of the US dollar.

In the aftermath of today’s inflation data, the market expectations for a rate cut at the Dec .18 meeting have jumped. The rate odds for a quarter-point have climbed to 97%, compared to 88% immediately prior to the release. The Fed has lowered rates twice this year and is poised for a third cut next week, even though the inflation downswing has stalled and inflation remains higher than the Fed’s 2% target.

USD/CHF Technical

• USD/CHF tested resistance at 0.8853 earlier. Above, there is resistance at 0.8876
• 0.8810 and 0.8787 are the next support levels

The Japanese Yen has lost 2.3% against the US dollar since the end of last week, roughly twice as much as the rise in the dollar index against a basket of six developed market currencies. This change is due to a shift in interest rate expectations, with investors increasingly doubting an imminent rate hike in Japan and seeing fewer rate cuts from the Fed next year.

Interestingly, the latest inflation data does not help the Yen. November data showed an acceleration in Japanese business input prices to 3.7% y/y, the highest since the middle of last year. Corporate services price growth (October data) jumped 0.8% m/m to an annualised pace of 2.9%, maintaining levels near 3% y/y since April. These indices are important leading indicators of inflation, pointing to increasing pressure on retail prices and supporting a policy rate hike by the Bank of Japan.

At the same time, the decline in core consumer inflation to 1.5%, as tracked by the BoJ, provides room to delay policy tightening. The BoJ can use this time to assess the economic outlook considering potential trade tariffs from the Trump administration.

For the bond markets, this slowness has the effect of pushing back expectations for a rate hike in Japan from mid-December to the end of January. For currency markets, this puts pressure on the JPY as accelerating inflation that does not lead to a rate hike leads to capital outflows from yen debt markets.

It would not be surprising to see an accelerated rise in the USDJPY. The technical picture has also turned bullish in recent days, as the pair has broken above its 200 and 50-day moving averages. In addition, a “golden cross” is forming as the 50-day is about to cross above the 200-day, which is a strong technical signal for further upside. The USDJPY could potentially reach levels of 156 before the end of the year and exceed 160 in the first quarter of 2025.