In November, the average weekly hours worked in the United States were better than expected, reaching 34.3 hours, compared to the forecast of 34.2 hours. This increase aligned with a small rise in Nonfarm Payrolls, which grew by 64,000 in November after dropping by 105,000 in October. US retail sales remained almost the same in October at $732.6 billion, which did not meet market expectations. A prior adjustment showed a smaller increase of 0.1% instead of 0.3% for September, indicating a stagnant retail market.

PMI Numbers Show Slowdown

The US S&P Global Manufacturing PMI decreased to 51.8, while the Services PMI fell to 52.9 in December. These numbers come after mixed employment reports, showing that growth in the private sector is slowing. In the markets, the GBP/USD rose above 1.3400, thanks to positive PMI data as the US Dollar weakened. At the same time, gold prices went above $4,300, benefiting from the weakened dollar following the recent jobs report, which showed an unemployment rate rise to 4.6% in November. We are observing clear signs of a slowing US economy as the year ends. The latest December data reveals that manufacturing and services are losing steam. Job numbers from November were mixed, and retail sales have plateaued. This trend suggests we may see ongoing economic challenges moving into the new year. The US Dollar is dropping due to this weak data, especially with the unemployment rate sitting at 4.6%. Markets now expect that the Federal Reserve might pause its rate hikes or even begin lowering rates in 2026. This expectation is similar to the policy shifts we saw in late 2023, which is causing pressure on the dollar.

Strategies for Traders

For currency traders, this indicates a strategy to anticipate further dollar weakness. It might be wise to buy call options on pairs like EUR/USD and GBP/USD, which are already gaining strength. This approach allows traders to benefit from the trend while minimizing risk. On the stock side, the slowing economy could affect corporate earnings. The VIX, which measures market fear, has risen to over 20, compared to an average of 17 in the third quarter. Buying put options on major indices like the S&P 500 could be a smart move to protect against a potential market decline in the coming weeks. Gold is significantly benefiting from the weak dollar and overall market uncertainty. Its jump above $4,300 an ounce shows that investors are seeking safety. We believe this trend will continue, making long call options on gold futures or related ETFs an appealing choice. Create your live VT Markets account and start trading now.

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