USD retraced some of its recent gains after testing resistance at the 200-day moving average. No policy-relevant data will be released today but a full slate of Fed speakers could generate some market volatility (Williams, Barr, Hammack, Waller, Paulson, and Musalem), BBH FX analysts report.

Challenger report shows surge in job cuts

"The Challenger October job cut report points to soft US labor market conditions. US-based employers announced 153,074 job cuts in October, up 175% y/y and 183% m/m. According to Challenger, 'this is the highest total for October in over 20 years, and the highest total for a single month in the fourth quarter since 2008. Like in 2003, a disruptive technology is changing the landscape'. For reference, in the year to October, job cuts totaled nearly 1.1 million, the highest cumulative total since 2020, while hiring plans totaled 488k, the lowest cumulative total since 2011."

"The ADP October employment change overshot expectations, but labor demand remains weak. ADP private-sector payrolls rebounded by 42k (consensus: 30k) after declining -29k (revised up from -32k) in September and -3k in August. Still, just 10k jobs were added on average in August, September, and October."

"We are sticking to our view that the Fed will deliver a follow-up 25bps cut to 3.50%-3.75% in December (67% priced-in) because restrictive Fed policy can worsen the already fragile employment backdrop and upside risk to inflation are not materializing. Bottom line: USD is bound to come under renewed downside pressure."