Focus on last data release before the FED meeting

It’s US non-farm payrolls day, which always is a big event for the US dollar and even more important this time as it is the latest release before the FED meeting. The Federal Reserve is widely expected to raise interest rates in December as recent economic data have mostly been strong and supporting the case for a rate hike. Analysts are forecasting that 175,000 jobs were created in November up from 161,000 in October.
 
In the US, yesterday’s data release showed a slight increase in construction spending but less than market consensus, printing at +0.5% MoM against an expected +0.6%. Initial jobless claims were reported as rising 17k last week to 268k while finally total vehicles sales in November fell to an annualized rate of 17.8m, from 17.9m. 
 
Mixed PMI data in Europe
 
Meanwhile, in Europe, the final manufacturing PMI's for November showed there was no change to printing at 53.7. PMI out of Germany was revised down by 0.1pt to 54.3, whilst data from France increased by a 0.2; Italy rose to 52.2 against 51.3 expected and Spain rose to 54.5 against 53.7 expected. In the UK, PMI was a bit more disappointing after printing at 53.4 against a market expectation of 54.4. Finally, the last data released for Europe was the unemployment rate which came in at 9.8%.
 
Political news dominated the scene
 
Yesterday, political news dominated the scene. In the UK, Brexit secretary David Davies and Chancellor Hammond suggested that Britain may continue to make payments to the European Union budget even after Brexit in exchange for access to the single market. The comments caused the pound to strengthen against the dollar as this is the first time such a view has been officially discussed. It is very early days but it appears that the UK government is seemingly becoming more pragmatic and ministers are softening their stance from the hard line that was taken at the Conservative party conference in October.
 
In other news, French President Hollande announced on live TV that he will not be seeking re-election in 2017, becoming the first sitting president in modern French history to rule out a re-match. Hollande admitted that it was risky to pull out of the race and also warned of the strength of the Front National, the far-right party headed up by Marine Le Pen. There will now be a contest within the Socialist party to find a different candidate with a likely favourite being Prime Minister Manuel Valls.
 
Expected results in Europe this weekend
 
It's a pretty quiet end to the week in Europe today with the sole release being the October PPI print for the Euro area. The main focus for markets today will be November US non-farm payrolls out in the US this afternoon.
 
This weekend, Italy will attract attention with the constitutional referendum being held on Sunday. Provisional turnout results will start coming in from 7pm UK time with exit polls expected around 10pm on Sunday night and final result could come in early on Monday.

It will also be worthwhile to keep an eye on the results of the Austrian presidential election re-run. Voting ends at 4pm GMT on Sunday with initial projections expected soon after.