Morning Market Review
Morning Market Review, The European currency is showing ambiguous dynamics against the US dollar during today’s Asian session, testing 1.1300 for a breakdown again. Market activity remains low as investors prepare for the release of the final US labor market report for November. As before, traders will closely monitor the state of this important sector of the American economy, hoping that strong data will be a catalyst for the US Fed to decide on a faster cut in the quantitative easing program and a subsequent increase in interest rates in 2022.
The US economy is expected to show the creation of 550K new jobs outside the agricultural sector, which is 20K more than last month. Europe during the day will also release October retail sales statistics for October and a block of data on business activity in November. In addition, today the President of the European Central Bank Christine Lagarde is scheduled to speak. She will again try to calm the markets, worried about the prospects of quarantine restrictions against the backdrop of the emergence of a new Omicron strain of coronavirus infection.
British pound quotes began to decline, developing flat dynamics in the short term. The instrument is still holding close to record lows, updated at the beginning of the week, as the market avoided risk amid a deteriorating epidemiological outlook. By the end of the week, the situation has stabilized somewhat, but there is still no clarity on the issue.
The incidence of the new virus continues to rise in South Africa and is gradually being reported in other regions of the world. The day before it became known that the first case of infection with the Omicron strain was confirmed in the United States, after which President Joe Biden called for tougher spot checks on tourists arriving in the country.
Morning Market Review, The Australian dollar has shown negative dynamics against the US currency during the Asian session, returning to previous record lows, updated last Tuesday. The situation can only worsen with the publication of a large block of macroeconomic statistics at the opening of the session in the US. Today, November data on the US labor market will be released, which, if positive investors’ forecasts are realized, will be an additional signal for the US Fed to more rapidly tightening monetary policy next year.
Statistics from Australia provided insignificant support to the instrument on Friday. Commonwealth Bank Services PMI in November rose from 55.0 to 55.7 points, which was better than the neutral forecasts of analysts. In turn, the AiG Performance of Construction Index for the same period decreased from 57.6 to 57.0 points.
The US dollar shows corrective growth against the Japanese yen in trading in Asia, recovering from a decline earlier in the week, which led to the renewal of local lows for the instrument from October 11. The American currency managed to consolidate above the psychological resistance at 113.00, receiving support from the expectations of a faster tightening of monetary policy by the US Fed.
On Friday, traders will be watching the November labor market report, which may confirm the continued uptrend in the US economy. In addition, during the day ISM business activity data for November will be released in the US, as well as statistics on factory orders in October. Analysts’ forecasts are rather modest and imply a reduction in the ISM Services PMI in November from the previous 66.7 points to 65 points. In contrast, the volume of Factory Orders may show an increase from 0.2% (MoM) to 0.5% (MoM).
Morning Market Review, Gold prices show corrective growth at the end of the trading week, retreating from the local lows from November 3, updated the day before. Technical factors contribute to the positive dynamics in the instrument, while the news background changes insignificantly. Traders are awaiting today’s publication of the November US labor market report, hoping that the US Fed will soon react to the supposedly strong data by tightening its rhetoric.
Earlier this week, the Chairman of the regulator, Jerome Powell, confirmed the systemic nature of inflation in the country, noting that the Fed may need additional efforts to stabilize its pace. At the same time, the European Central Bank and the Bank of England are still taking a wait-and-see attitude, analyzing data on the incidence of a new strain of coronavirus. Previously, the markets predicted that the British regulator may raise the interest rate in December in response to the rapid rise in inflation.