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Markets await US jobs report to wrap up volatile week

Here is what you need to know on Friday, December 2:

The US Dollar stayed under constant selling pressure following the macroeconomic data releases on Thursday and the US Dollar Index dropped to its lowest level since late June below 105.00. As investors await the November jobs report, the US Dollar struggles to stage a rebound. October Producer Price Index (PPI) will be featured in the European economic docket and Statistics Canada will publish the labor market report for November. Several Federal Reserve policymakers, including Richmond Fed President Thomas Barkin and Chicago Fed President Charles Evans, will be delivering speeches before the Fed blackout period starts on December 3.

Nonfarm Payrolls Preview: Dollar selling opportunity? Low expectations to trigger temporary bounce.

The data published by the US Bureau of Economic Analysis (BEA) revealed on Thursday that the Personal Consumption Expenditures (PCE) Price Index declined to 6% on a yearly basis in October from 6.3% in September. Other data showed the ISM Manufacturing PMI declined to 49 in November from 50.2, revealing a contraction in the manufacturing sector’s economic activity. In addition, the inflation component of the PMI survey, the Price Paid Index, dropped to 43 from 46.6. In turn, the benchmark 10-year US Treasury bond yield dropped below 3.6% and the US Dollar suffered heavy losses against its major rivals.

Meanwhile, Bloomberg reported earlier in the day that China’s politburo was likely to signal a policy shift toward a more pragmatic approach to coronavirus restrictions and focus on promoting economic growth. This headline doesn’t seem to be having a significant impact on risk perception with the US stock index futures trading virtually unchanged in the early European morning.

EUR/USD gained nearly 100 pips on Thursday and closed above 1.0500 for the first time since June. The pair clings to modest daily gains at around 1.0530 early Friday. While speaking at a conference organized by the Bank of Thailand, European Central Bank President Christine Lagarde reiterated that central banks must work to make sure inflation falls back to target but these comments failed to trigger a noticeable market reaction.

GBP/USD has gone into a consolidation phase at around 1.2250 after having briefly climbed above 1.2300 on Thursday. The UK economic docket will not be featuring any high-tier data releases ahead of the weekend.

USD/JPY fell sharply on Thursday and continued to push lower toward 135.00 early Friday. The pair is down nearly 400 pips for the week. During Asian trading hours, Bank of Japan Governor Haruhiko Kuroda said that they have been observing a global economic slowdown and added that inflation in Japan was expected to decelerate from 2023.

Fueled by falling US T-bond yields and the broad US Dollar weakness, Gold price registered impressive gains and rose above $1,800 for the first time in four months. XAU/USD was last seen moving sideways at around $1,800.

US November Nonfarm Payrolls Preview: Analyzing gold’s reaction to NFP surprises.

USD/CAD failed to take advantage of the US Dollar selloff and closed virtually unchanged at 1.3435 on Thursday. The pair fluctuates in a tight range below 1.3450 early Friday. The Unemployment Rate in Canada is forecast to edge higher to 5.3% in November from 5.2% in October.

Bitcoin snapped a two-day winning streak and lost 1% on Thursday before going into a consolidation phase slightly below $17,000 early Friday. Ethereum trades modestly higher on the day at around $1,270 after having lost more than 1% on Thursday.

Read More: Markets await US jobs report to wrap up volatile week

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