The US Dollar softened slightly on Thursday, easing as markets digest recent political changes in France. The biggest contribution to the greenback sell-off came from its major opponent, the Euro, with the EUR/USD pair striving to break above 1.0550 during European trading hours. This uptick comes as investors look past the expected collapse of France's short-lived government under former Prime Minister Michel Barnier, who lost a no-confidence vote supported by both far-right and left-wing coalitions. President Emmanuel Macron is now tasked with appointing a new prime minister, and the prospect of political stabilization appears to be buoying the Euro:

In the United Kingdom, the Pound Sterling strengthened against major currencies. This gain is attributed to firm expectations that the BoE will adopt a more gradual approach to lowering interest rates compared to other central banks. BoE Governor Andrew Bailey indicated that interest rates should be cut "gradually," noting that the process of reducing inflation is "well embedded." Despite some initial negative reactions, the Pound recovered as Bailey's comments suggested cautious optimism about the UK's monetary policy path:

European Central Bank President Christine Lagarde, in her testimony before the Parliamentary Committee, highlighted increasing risks to the Eurozone's economic outlook. She stated, "The medium-term economic outlook is uncertain and dominated by downside risks," citing elevated geopolitical tensions and growing threats to international trade. While Lagarde maintained a data-dependent stance on interest rates, traders anticipate that the ECB will make monetary policy even less restrictive, cutting Deposit Facility Rate by 25 basis points to 3% at the upcoming meeting on December 12.

In the United States, Fed’s Chair Jerome Powell warned that the nation's debt trajectory is "unsustainable" and requires immediate attention. Market expectations, as reflected by the interest rate derivatives, show a 74% probability of a 25 basis point rate cut at the FOMC’s December 18 meeting, influenced by recent Fed minutes and comments from officials. The remaining 26% anticipate that rates will remain unchanged.

Germany reported a 1.5% decline in factory orders for October, a contraction less severe than the expected 2% decrease and following a substantial 7.2% rise in September. While the decline indicates a slowdown in Europe's largest economy, the better-than-expected figure may mitigate some concerns about the region's economic health.

Looking ahead, the economic calendar is relatively calm compared to recent days. Key data releases include the US weekly Jobless Claims and the Challenger Job Cuts for November, as well as Trade Balance figures. These employment-related reports are particularly significant ahead of Friday's NFP release. The weekly Jobless Claims are projected to show a slight uptick to 215K from the previous week's 213K. Overall, Initial Claims have been trending downward for several months, which contrasts with the widely discussed disinflation narrative. Typically, disinflation should align with rising unemployment, making Initial Claims a crucial indicator to watch:

Consensus estimate regarding the NFP is that the US economy added 200K jobs in November, a significant increase from the modest 12K jobs added in October, which was impacted by hurricane-related disruptions. The unemployment rate is expected to edge up to 4.2% from 4.1%. Investors will also focus on the US Average Hourly Earnings data to gauge wage growth and its implications for wage-driven inflation.