The US and Italy will command maximum attention as this week draws to a close. Later today, the US Labour Department is scheduled to release its more closely watched monthly nonfarm payrolls report for November. Upbeat data from the US docket in the second half of 2016 have increased the odds of an interest rate rise by the Federal Reserve (Fed) at its December meet. Moreover, the optimistic ADP figures published earlier this week show less likelihood for a disappointment in today’s report. In the UK, the just released construction purchasing managers’ index (PMI) surprisingly rose in November.

This weekend, the dreaded word “REFERENDUM” raises its ugly head again. However, this time it is on the other side of the English Channel – Italy. The Eurozone’s 3rd largest economy holds a referendum on key constitutional changes that aim to slim down the country’s legislature and speed up lawmaking. Prime Minister Matteo Renzi has pledged to resign in the case of a “No” vote.

Pound Sterling – UK Markets

Sterling is trading on a stronger footing against its major peers this morning, after the just released data showed that Britain’s construction PMI unexpectedly advanced to an 8-month high in November. Looking ahead, next week appears to be a pretty crucial one for the Pound, with a plethora of economic data-points up for release. These include the nation’s industrial production and services PMI along with the NIESR GDP estimate for the three months ended November.

Yesterday, the Pound managed to hold on to its gains against the US Dollar for the third consecutive session, despite the release of downbeat manufacturing PMI data. A closely-watched survey showed that British manufacturing sector growth unexpectedly slowed in November, as a weaker domestic currency had factories struggle with soaring costs. The Pound responded positively to comments by the UK Brexit Secretary, David Davis, who stated that Britain might consider paying for access to the European single market. Adding to this, the Euro-group President, Jeroen Dijsselbloem, indicated that Britain might be able to participate in the single market after the Brexit.

US Dollar – US Markets

The greenback is trading mixed against the shared currency and the Pound this morning, with the US nonfarm payrolls for November taking centre stage today. An upbeat report on US labour market will aid traders in projecting whether the Fed will raise the federal funds rate in its last monetary policy meeting for 2016. Additionally, unemployment rate and average hourly earnings will be on investors’ radar.

The US Dollar paused its recent rally against a basket of six major currencies yesterday, after the release of dismal weekly jobless claims report. The number of Americans filing for new jobless benefits in the US rose more than expected during last week, its highest reading in 5 months. Meanwhile, growth in US manufacturing sector accelerated as the ISM manufacturing PMI expanded in November, led by increased production, new orders and inventories. Another manufacturing report showed that the final Markit manufacturing PMI expanded more than previously estimated in November.

Euro – European Markets

The shared currency is trading lower against the US Dollar and the Pound this morning. Data released earlier in the session showed that the number of unemployed people in Spain surprisingly advanced in November. Looking ahead, the Eurozone’s producer price index (PPI) for October is up for release in some time. Meanwhile, the near-term trajectory in the Euro – US Dollar currency pair will remain dependent on the Italian constitutional referendum this weekend and the outcome could trigger sharp swings in the shared currency.

Yesterday, the Euro ended higher against it major peers, after official data from the Eurostat showed that the Eurozone’s unemployment rate unexpectedly hit a 7-year low of 9.8% in October. Further, robust domestic demand aided final print of Italian economic growth to rebound in the third quarter of this year and it came in confirmation to the preliminary reading. Separately, the Euro region’s final manufacturing PMI for November registered its highest reading since January 2014. Other elements of the report were positive too, with new and export orders rising.

Other Currencies – Highlights

The Canadian Dollar remains on a firm footing against its American counterpart at the end of this week. The greenback continues to surrender its earlier gains, amid a mixed batch of data releases from the US docket during the previous session. While the ISM manufacturing PMI surprised investors on the upside in November, a disappointing weekly jobless claims data weighed on the US Dollar. Later today, labour market reports from both Canada and the US will take centre stage.

During the previous session, rising oil prices lent support to the commodity-related Canadian Dollar. News of the OPEC deal to slash production sent oil prices soaring, thus lending broad support to the Canadian dollar. On the data front, Canada’s manufacturing sector modestly picked up in November, as new orders rose to a 7-month high level. This followed closely on the heels of a robust GDP data released just a day prior. Canada recorded its strongest economic growth in over 2 years during 3Q 2016, powered by energy exports and household consumption.