NFPs the main focus of the day
An interesting week is coming to an end today. The week thus far resulted in USD weakness, also because economic data out of the US has not really given us reasons to assume that everything is doing great in the land of the free. Even yesterday’s import and exports BOTH went lower not really showing any signs of expansion for the US’ economic activity. Therefore today’s labor market number should be closely watched, not jus tits headline but also the other components such as the average hourly earnings. We are offering a FREE WEBINAR LIVE right around the NFP event, which you can join here:
US-China Phase 1 Deal Hope Remains
The first week of December also included US stock markets to sell off for the first time in almost forever and as of now the US Markets have recovered around half of what they had sold off in the early part of the week. This means that the hope has not died down yet. Hope that the Phase 1 trade trade deal will happen before the end of the coming week, as on that Sunday, Dec 15th the additional tariffs would kick in. A Wallstreet Journal report tells that the main sticking point remains agricultural purchases of China from the US which Donald wants to increase to 40 or 50 billion while China’s purchase volume last year for example had only been $8.6 billion.
Political Ice Age
Meanwhile the tone between the US and China remains formally friendly but you can see that both are taking more and more measures against another with the latest being that in response to US restrictions on Chinese diplomats, China now requests US diplomats in China to submit a written notice five working days in advance before their formal meeting with any Chinese local govt officials and formal visit to educational/research institutes.
The USD has weakened significantly this week on continued rather weak economic data out of the US. Today’s NFP result will likely impact the price of the Dollar. Especially average hourly earnings, which are a lot more relevant for inflationary developments should be focussed on.
EUR and GBP
The EUR continues to be in place to benefit from the USD weakness as thus far it barely made it to the important 1,11 round figure. Chances are that today’s NFP result will decide the battle of the 1,11. Meanwhile the GBP remains high pricing in the win of the Tories more and more and could make an attempt towards the 1.32 on negative NFP results.
With the RBNZ introducing that local banks need to increase their capital ratios the Kiwi had one more reason to appreciate and could see strong further upside today if the USD weakens further
This week’s BoC meeting turned out to be a lot less dovish than feared for which propped up the price of the CAD accordingly. Today the employment report out of Canada comes in at the same time as the US NFP and thus creating a possibly supercharged trading opportunity if for example Canadian numbers come in strong and US’ soft or vice versa. Make sure you watch both at the time.
The price of Oil still has not moved much and it is not clear yet as to what the OPEC and non-OPEC members have agreed on. We are expecting the news today and whether there will be deeper and longer production cuts or not which will likely impact the price of oil once announced. Be prepared for significant oil news over the course of the day today!
Gold often sells off into the NFP and recovers right after. Let’S see if this pattern may repeat itself. In any case gold will likely see more influence next week with the trade deal deadline ahead.
Bitcoin is now officially stuck around the $7,4k. Volatility has come down yesterday compared to before and it seems there is a bit of stabilization taking place amid a lack of external driving factor to trigger the next bigger move. It is a wait and see until key levels are broken for the time being.