The Dollar mixed post US NFP – Ahead: RBA, BOC rate meetings

AUD, CAD Dip, Bond Yields Ease, Wall Street Stocks Steady.

Summary

The US economy added a total of 263,000 jobs in November, bettering median estimates at 200,000 and a previous 261,000. The Unemployment Rate was unchanged at 3.7%.

Last week, US Federal Reserve President Jerome Powell said that the US central bank would slow that pace of interest-rate increases. Global bond yields mostly eased. The benchmark US 10-year treasury bond rate slipped 4 basis points to 3.49% (3.53%).

The Dollar Index (DXY), a popular gauge of the Greenback’s value against a basket of 6 major currencies settled modestly lower, at 104.50 from Friday’s open at 104.71.

Sterling (GBP/USD) outperformed, climbing 0.32% against the US Dollar to 1.2282 (1.2258) mainly on short covering. The Euro (EUR/USD) closed little changed, at 1.0532 from 1.0518.

The Australian Dollar (AUD/USD) dipped to 0.6803 (0.6815). Australia’s Q3 Private Capital Expenditure (q/q) slid to -0.6% from a previous -0.3% and forecasts at 1.6%.

Against the Canadian Loonie, the US Dollar (USD/CAD) rose to 1.3465 from 1.3425 after Canadian Employment climbed by +10,100, far less than the previous +108,300.

The Greenback though, slid 0.75% lower against the Japanese Yen (USD/JPY) to 134.30 from Friday’s 135.25. A lower close in the US 10-year bond yield weighed on the USD/JPY pair.

The US Dollar finished lower against the Asian and EMFX. USD/CNH (Dollar-Offshore Chinese Yuan) fell to 7.0225 (7.0425) while USD/THB (Dollar-Thai Baht) closed at 34.72 (34.79).

Other economic data released Friday saw Japan’s Final Manufacturing PMI slip to 49.0 from 49.4.

Germany’s October Trade Surplus climbed to +EUR 6.9 billion from a previous +EUR 2.8 billion and beating economist’s expectations of +EUR 5.2 billion.

Eurozone PPI (m/m) fell to -2.9% from a previous 1.6%, and forecasts at -2.0%. Canada’s Unemployment Rate eased to 5.1% from a previous 5.2% and beating estimates at 5.3%.

US Average Hourly Earnings (Wages) for November climbed to 0.6% from a previous upward revised 0.5% (from 0.4%), and higher than estimates at 0.3%.

USD/JPY – Against the yield sensitive Japanese Yen, the US Dollar tumbled 0.75% to 134.30 from 135.25 Friday. The 4-basis point fall in the US 10-year bond yield weighed on the Greenback versus the Yen. Overnight low traded was at 133.62 while the high recorded was at 135.98 in another volatile session.

EUR/USD – The shared currency managed to edge higher against the US Dollar, bucking the trend of most currencies. The Euro finished at 1.0532, up modestly from Friday’s open at 1.0518. Like the British Pound, speculative short covering lifted the EUR/USD pair.

AUD/USD – The Australian Dollar eased against the Greenback to 0.6803 after its strong rally late last week. Overnight, the Aussie Battler traded to a high at 0.6836 before easing to its close. In volatile trade, the overnight low traded was at 0.6742.

GBP/USD – Sterling rallied 0.32% against the US Dollar to 1.2282 from Friday’s open at 1.2258. The stronger than expected rise in US Payrolls was generally supportive of the Greenback and weighed on the British Pound. Overnight low traded was at 1.2134 while the overnight high recorded for Sterling was at 1.2300.

On the lookout

The week ahead sees two central bank policy meetings as well as the release of US Producer Price Index, a measure of wholesale prices.

Given the market’s focus on inflation, the US November PPI will attract attention (released on Friday, 9 December).

The Reserve Bank of Australia is widely expected to increase its Overnight Cash Rate to 3.10% from 2.85% when its meets tomorrow (06 December, 2.30 pm Sydney time).

The Bank of Canada is the other major central bank to have its interest rate meeting this week (Thursday, 8 December, 2 am Sydney time). The Canadian central bank (BOC) is expected to raise its Overnight Rate to 4% from the current 3.75%.

Today’s economic calendar kicked off earlier with Australia’s AIG November Services PMI which slipped to 47.6 from a previous 49.3, but higher than median estimates at 47.2.

Australia’s ANZ Bank Job Advertisements for October (f/c -1.2% from -0.5% - ACY Finlogiz) and November (f/c -2%) follow.

Japan is next with its Jibun Bank November Services PMI (f/c 50 from 53.2 – ACY Finlogix). China releases its Caixin Services PMI for November (f/c 47 from 48.4 – ACY Finlogix).

Italy starts off European data with its November Services PMI (f/c 48.3 from 46.4), French November Services PMI (f/c 49.4 from 51.7), German November Services PMI (f/c 46.4 from 46.5), and Eurozone November Services PMI (f/c 48.6 from 48.6) – all courtesy of ACY Finlogix.

France releases its October Retail Sales report (m/m f/c 0.5% from 0.2%; y/y f/c 0.3% from 0.8% - ACY Finlogix).

The UK releases its Final Services PMI for November (f/c 48.8 from 48.8 – ACY Finlogix).

Canada kicks of North American data with its October Building Permits (m/m f/c 0.9% from -17.5%). The US rounds up today’s economic data dump with its November Final Services PMI (f/c 46.1 from 47.8), US October Factory Orders (f/c 0.7% from 0.3% - ACY Finlogix) and US November ISM Non-Manufacturing PMI (f/c 53.1 from 54.4 – ACY Finlogix).

Trading perspective

The robust US Jobs growth in November saw the Greenback finish mixed against its Rivals.

The Dollar Index (DXY) though eased modestly to 104.50 from 104.71 as US bond yields dipped.

The benchmark 10-year treasury note settled at 3.49% from 3.53% Friday.

The week ahead sees a busy economic data calendar with the release of global services PMIs as well as the RBA and BOC interest rate meetings this week. Last week saw the USD bears gain the upper hand. This week though, markets will be more cautious and an initial bounce in the Greenback versus it’s Rivals is to be expected.

EUR/USD – The Euro edged up against the Greenback to 1.0532 from Friday’s open at 1.0518. For today, look for immediate resistance at 1.0545 to cap (overnight high traded was at 1.0544). The next resistance level is found at 1.0580 and 1.0610. Immediate support is found at 1.0500, 1.0470 and 1.0440. Look for the Euro to trade a likely range today between 1.0450-1.0550 first up. In the past, the Euro mostly appreciated during the month December. The preference today though is to sell Euro rallies.

AUD/USD – With Friday’s asset markets mostly on risk-off mode, the Australian Battler dipped against the US Dollar to 0.6803 from Friday’s 0.6815. Overnight high traded was 0.6836. Which puts immediate resistance today at 0.6835. The next resistance level lies at 0.6855 and 0.6885. On the downside, look for immediate support at 0.6780 and 0.6740 (overnight low traded was 0.6842). Look for initial sideways trading with a likely range of 0.6740-0.6840. Prefer to sell rallies.

GBP/USD – Sterling managed to finish with modest gains versus the Greenback to 1.2282 from 1.2258 Friday. Overnight high traded was at 1.2300. Today, look for immediate resistance at 1.2300 followed by 1.2340. On the downside, immediate support can be found at 1.2250, 1.2220 and 1.2180. Look for the British Pound to drift lower in a likely range today between 1.2210-1.2310.

USD/JPY – The Dollar had the biggest move against the Yen, tumbling 0.74% lower to 134.30 from Friday’s 135.25. The catalyst was the lower finish in the US 10-year bond yield to 3.49% from 3.53%. On the day, look for immediate support at 134.00, 133.70 and 133.40. On the topside, immediate resistance is found at 134.70, 135.00 and 135.40. Look for a likely trading range today of 133.80-135.30. Just trade the range shag on this one today.

(Source: Finlogix.com)

Have a good trading week ahead all. Happy Monday.