Where We WereAs Stock markets edged lower from record highs last week, the Fed, like everyone else, continues to face a data drought. Tech Stocks experienced a sizeable hit, with the Nasdaq 100 down around 3.0% at the close, weighed by stretched valuations and uncertainty over AI monetisation. Despite a bid in Spot Gold this morning – driving north of US$4,000 – the yellow metal settled last week largely unchanged. The US Dollar – albeit strengthening in the first half of the week – struggled to hold onto gains following last Thursday’s US Challenger Job Cuts report, which revealed 153,074 announced layoffs in October, the highest monthly total since 2003. While a moderate rebound in job creation was seen in last Wednesday’s October ADP print, the lack of growth in small- and medium-sized companies, along with Thursday’s announced layoffs, points to labour market softness. Investors have assigned a 63% chance that the Fed will cut the Federal funds target rate by another 25 bps (-16 bps) at its December meeting – a notable divergence from previous assumptions of more aggressive loosening.It was also a busy week of Fed speak, with a mixed bag of opinions. In a recent post, I noted that Cleveland Fed President Beth Hammack and Fed Governor Michael Barr voiced concerns about inflationary pressures, with Hammack stating that price pressures pose a bigger risk than labour market softness, and Barr underlining that there is ‘still work to do’. I also highlighted that Chicago Fed President Austan Goolsbee expressed apprehension about making decisions without official data during the ongoing government shutdown.The government shutdown is now the longest in history. Beyond the absence of official data, you may recall that the Congressional Budget Office recently released a report stating that, depending on when the shutdown ends, it will reduce the annualised real GDP growth for Q4 25 by 1.0% to 2.0%.GBP Rebounded Just North of US$1.30 The GBP emerged as a notable underperformer earlier last week, trading to within a hair of the US$1.3000 threshold before rebounding to settle Friday in positive territory.In the absence of US data this week, the September UK jobs report will be one of the highlights to keep an eye on, particularly after the BoE’s narrow 5-4 MPC vote split in favour of keeping the bank rate on hold at 4.00% last week. Heading into this print, economic activity in the UK remains weak, the jobs market and wage growth continue to cool, and money markets are pricing in around -14 bps of easing for December’s meeting (60% probability). Expectations for the event suggest the unemployment rate increased to 4.9%, from 4.8%, with wage growth expected to moderate. This will be especially important following BoE Governor Andrew Bailey’s comments, in which he noted that further policy easing will be contingent on forthcoming inflation prints confirming September’s ‘encouraging’ moderation.If data comes in much stronger than expected, it could prompt a hawkish repricing (increased odds of a hold decision), which will likely drive demand for GBP. Conversely, ugly data would likely trigger a dovish repricing, increasing the chances of a cut, which, in turn, could weigh on the currency. The Research Team underscored a particularly interesting technical setup on GBP/USD last week, which remains in play: demand at US$1.2871-US$1.3016 and the completion of an AB=CD bullish formation at US$1.3078 (100% projection ratio). From this point, traders tend to target the 38.2% and 61.8% Fibonacci retracement ratios derived from legs A-D at US$1.3307 and US$1.3491, respectively.October Aussie Jobs ReportAnother risk event to watch this week will be the Australian October employment report on Thursday. Expectations indicate the jobless rate dropped to 4.4%, from 4.5% in September, with employment change forecast to increase by 20,000, from 14,900. It was September’s print, along with a jump in inflationary pressures (the main determinant for a hold, I believe), that prompted the RBA to leave the cash rate unchanged at 3.60% for a second consecutive meeting last week. As of writing, per market pricing, less than 5 bps worth of cuts are priced in for December’s meeting.As far as I can see, weak job growth this week and rising unemployment would echo a stagflation environment where slowing growth meets persistent inflation. This will likely increase the odds of a cut and may weigh on the AUD, and could be a particularly emphasised move with positioning stretched to the upside right now.Conversely, should unemployment fall and job growth come in strong, this could prompt a bid in the AUD as reduced stagflation concerns give the RBA more breathing space to tackle inflation. However, with positioning already stretched to the upside, the rally may prove short-lived.