GBP/USD wobbles near 1.2452 as stronger-than-expected ISM Services PMI and JOLTS data support the greenback. The US ISM Services PMI rose to 54.1 in November, up from 52.1, surpassing market anticipations of 53.3. The Prices Paid Index, an indicator of inflation, climbed to 64.4 from 58.2, while the Employment Index dipped to 51.4 from 51.5.

Meanwhile, JOLTS job openings rose sharply to 8.098 million, up from 7.70 million. Conversely, the trade deficit widened in November as Trade Balance figures printed at $-78.2 billion, up from $-73.6 billion. On the sterling front, the UK's Final Services PMI worsens concerns over the UK's fragile economic outlook, weighing on the currency. Latest UK Retail Sales figures saw a notable 3.2% increase year-over-year in December 2024, marking its highest level since March 2024. As the UK's economic data remains scarce, the market sentiment around the ADP Employment Change numbers for December and the Fed's latest Meeting Minutes will drive the GBP/USD pair.

AUD/USD Holds Steady Ahead of FOMC Minutes

AUD/USD edges lower to 0.6227 as the Australian Dollar struggles following the inflation figures. Australia's trimmed mean, an indicator for core inflation, fell to 3.2% from 3.5%, nearing the RBA's 2%-3% target. However, the monthly CPI rose 2.3% year-over-year in November, exceeding the 2.2% forecast and up from 2.1% in the previous two months, marking the highest reading since August. Meanwhile, building approvals dropped by 3.6% in November following a 5.2% increase in October.

On the dollar front, better-than-expected economic figures strengthen the greenback. The US ISM Services PMI increased to 54.1, up from 52.1, exceeding the market forecast of 53.3. The Prices Paid Index, which reflects inflation, rose to 64.4 from 58.2, whereas the Employment Index fell slightly to 51.4 from 51.5. Additionally, JOLTS job openings surged to 8.098 million, a significant rise from 7.70 million. The FOMC Minutes and Friday's Nonfarm Payroll (NFP) report will significantly influence the AUD/USD movements in the upcoming session.

EUR/USD Subdued by Downbeat German Data

EUR/USD lost momentum near 1.0320 as mixed German data exerts selling pressure on the euro. Germany's Retail Sales dropped by 0.6% month-on-month in November, following a 1.5% decline in October, while annual Retail Sales increased by 2.5% in November, beating the expected 1.9% and up from 1.0% in October. German Factory Orders dropped by 5.4% month-on-month in November, a sharper decline compared to the previous 1.5% drop, below the expected flat growth of 0%.

European Harmonized Index of Consumer Prices (HICP) inflation rose slightly to 2.4% YoY from 2.2%, aligning with expectations. On the US front, hotter-than-expected ISM Services PMI and Prices Paid Index fuel the market speculation around the Federal Reserve's upcoming interest rate decision, influencing the dollar. In today's session, pan-EU Producer Price Index (PPI) inflation data, ADP Employment Change figures, and the Fed's Meeting Minutes will drive the EUR/USD movements.

USD/CAD Muted Ahead of FOMC Meeting Minutes

USD/CAD continues its downward momentum near 1.4362 as bullish crude oil prices underpin the commodity-linked loonie. However, traders are still assessing the impact of Canadian Prime Minister Justin Trudeau's resignation after nine years in office amid rising tariff threats, political instability, and declining approval ratings, which could lead to snap elections. Meanwhile, the Ivey Purchasing Managers Index increased to 54.7 in December from 52.3 in November, falling below the expected 55.4, indicating a steady economic expansion.

On the contrary, the latest ISM services figures suggested increased activity and rising prices, raising concerns over inflationary pressures. However, robust US economic data provoked a hawkish shift in investor sentiment about the Federal Reserve's monetary policy outlook, strengthening the dollar. Traders will closely monitor Friday's Canadian Employment Change and Unemployment Rates, US Nonfarm Employment Change, and oil price dynamics for a fresh direction in the USD/CAD.

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