This week sees the first release of official major US data since the shutdown, with markets keen to get an update on the state of the American economy. The immediate effect on the markets might be somewhat blunted, considering how soon after the FOMC meeting it is. However, the divided Fed generated market uncertainty about the outlook for rates. This could mean data will have a greater impact, with surprises potentially affecting the currency more.

The timing of the data release can also influence the reaction; this is the last major US data before the extended year-end holidays. It also comes ahead of key interest rate decisions by the ECB, BOE, and BOJ later this week, and could provide important context for the market. The data could set the tone among traders for the rest of the year, with the market moving for days after the release.
 

What to Look Out For

The main effect of the economic figures is on the outlook for interest rates next year. At the last FOMC meeting, the Fed heavily suggested that it would be difficult to make another rate cut. The so-called “dot-plot matrix” consensus implied only one more rate cut for the whole of 2026. But it also showed substantial division among the members, as was illustrated by the three dissenting votes. That’s the highest number of dissenters in almost a decade.

One group of FOMC members is concerned that inflation remains well above the Fed’s target and could be further pressured by tariffs. Although the Fed has access to inflation data from other sources, the official reading will carry significant weight. If it beats expectations, then it could mean these FOMC members will stick to their guns about not cutting rates. On the other hand, if the inflation rate is well below consensus, then the market might start to consider that some of the hawkish Fed members will become more dovish.
 

The Important Jobs Numbers

The other contingent is pushing for further easing, arguing that weakness in the jobs market is a bigger concern. During the data blackout, markets relied on ADP figures, which showed November job losses of 32K. If the data suggest that the jobs market has become even weaker, then the dovish contingent in the FOMC could see their argument strengthened. This would likely weaken the dollar, as the market prices in a higher likelihood of additional rate cuts.

On the other hand, if the data show the labour market is stronger than anticipated, that could reinforce expectations that the Fed will hold rates for at least the first couple of months of next year, supporting the greenback.
 

What to look out for

On Tuesday, the November NFP is expected to come in at 35K, compared with the previous release, which was in September, at 119K. The BLS will also release a partial October reading, but the market is likely to be most concerned with the latest data. At the same time, the unemployment rate is projected to rise to 4.6% from 4.4% in September.

US CPI figures are released on Thursday and are expected to show the headline inflation rate unchanged at September’s 3.0%. The core rate is anticipated to be identical at 3.0% as well.

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