The dollar trembles as inflation decline, with jobs data in the spotlight
Asian stock market closes in green on Thursday. The Shanghai Composite is up 0.45% at 3165.47 Overall, the Singapore MSCI is up 1.53% at 300.35. Over in Hong Kong, the Hang Seng Index is up 0.75% at 18786.44. In Japan, the Nikkei 225 is up 0.92% at 28226.08, while the Topix index is up 0.045% at 1986.46 South Korea’s Kospi is up 0.30% at 2,479.84. Australia S&P/ASX 200 up 0.96% at 7354.40.
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The dollar held firm on Friday but was pinned near 16-week lows against a basket of major currencies as data showing increased U.S. consumer spending emboldened investors’ hopes that the peak in interest rates was in sight.
The dollar index, which measures the currency against six major peers including the yen and euro, rose 0.05% to 104.71, not far off Thursday’s trough of 104.56, the lowest since Aug. 11.
Data on Thursday showed that U.S. consumer spending in October increased at its greatest pace since January and the labour market remained resilient, with the number of Americans filing new claims for unemployment benefits declining last week.
The latest signs of a strong U.S. economy came after Federal Reserve Chair Jerome Powell said on Wednesday that it was time to slow rate hikes, noting that “slowing down at this point is a good way to balance the risks.”
Market Summary as per 1/12/2022:
European equities Thursday closing. The DAX futures contract in Germany traded up 0.65% at 14490.30, CAC 40 futures up 0.23% at 6753.97. UK 100 futures contract in the U.K. down 0.19 at 7558.49.
In the U.S. on Wall Street, the Dow Jones Industrial Average Closed down 0.56% at 34395.01. The S&P 500 down 0.087% at 4076.57 and the Nasdaq 100 up 0.13% at 11482.45, NYSE closes 0.12% up at 15761.12.
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In the Forex market, GBPUSD up 0.08% at 1.2264. The USDJPY down 0.48% at 134.62 The USDCHF up 0.51 at 0.9539. EURUSD down 0.16% at 1.0540. EUR/GBP up 0.10% at 0.8636. The USD/CNY down 0.37% at 7.0603 at the time of writing.
In the Commodity market U.S. Gold futures down at 0.04% $1,802.91. Elsewhere, Silver futures up 0.22% at $22.796 per ounce, Platinum up 0.56% at $1051.90. per ounce, and Palladium down 0.20% at $1942.50.
Brent Crude Oil up 0.33% at $87.17 per barrel.
In the Cryptocurrency Markets, Bitcoin at 16958.20 down 0.12%, Ethereum down 0.06% at 1275.76, Litecoin at 76.62 down 1.25%, at the time of writing.
Top Market Segment to Watch Out for Today:
GOLD: – Gold prices steadied around multi-month highs on Friday as markets hunkered down ahead of key U.S. payrolls data that could factor into the path of monetary policy, while copper stuck to a two-week high on hopes of a Chinese reopening.
Metal markets were set for strong gains this week, tracking signals from the Federal Reserve that the central bank will hike interest rates at a slower pace in the coming months. Precious metals, which were pressured by a sharp rise in rates this year, were the main beneficiaries of this rally.
Spot gold fell 0.1% to $1,800.96 an ounce, but remained near three-month highs, while gold futures hovered near $1,814.70 an ounce- their strongest level in five months.
US: U.S. job growth was likely the smallest in two years in November as mounting worries of a recession cooled demand for labour, which could give the Federal Reserve confidence to start slowing the pace of its interest rate hikes this month.
The Labor Department’s closely watched employment report on Friday, which is also expected to show a continued moderation in wage gains last month, would follow on the heels of news on Thursday of a slowdown in inflation in October.
But the labour market remains tight, with 1.7 job openings for every unemployed person in October, keeping the Fed on its monetary tightening path at least through the first half of 2023. Labor market strength is also one of the reasons economists believe an anticipated recession next year would be short and shallow.
“It’s kind of like it’s good news but not great news. The labor market is still extraordinarily strong and still very tight,” said Agron Nicaj, U.S. economist at MUFG in New York. “The Fed might slow down the pace of rate hikes, but they are not at a point where they are going to completely stop.”
The survey of business establishments is likely to show that nonfarm payrolls increased by 200,000 jobs last month, according to a Reuters poll of economists, the smallest number since December 2020, after rising by 261,000 in October. Estimates ranged from 133,000 to 270,000.
Euro Zone: –
European Central Bank President Christine Lagarde warned on Friday that some European governments’ fiscal policies could lead to excess demand and that fiscal and monetary policies need to work coordinated for sustainable, balanced economic growth.
“Fiscal policies that create excess demand in a supply-constrained economy might force monetary policy to tighten more than would otherwise be necessary,” Lagarde said at a conference hosted by the Bank of Thailand and Bank for International Settlements in Bangkok.
The European Commission expects the eurozone economy to shrink in the fourth quarter of 2022 and in the first three months of 2023 because of surging energy prices and rising interest rates which undermine spending, borrowing power, and confidence.
“We need higher investment and structural reforms to remove the supply constraints and ensure that potential output is not impaired by the changing global economy. And that is a big question and uncertainty that we have,” said Lagarde.
With inflation running at five times its 2% target, the ECB has raised interest rates at its fastest pace on record this year and a string of hikes over the coming months is still likely as price growth will take years to tame.
Its rate on bank deposits was increased by 200 basis points to 1.5% in three months
Top Economic Releases Today:
- USD: Nonfarm Payrolls (Nov) Forecast 200K, Previous 261K at 19:00
- USD: Unemployment Rate (Nov) Forecast 3.7%, Previous 3.7% at 20:26
- EUR: ECB President Lagarde Speaks at 08:10
- NZD: RBNZ Gov Orr Speaks at 10:00
- CAD: Employment Change (Nov) Forecast 5.0K, Previous 108.3K at 19:00
GBPUSD TECHNICAL ANALYSIS
TRADE SUGGESTION – BUY AT 1.22175, TAKE PROFIT AT 1.23985, SL AT 1.21967
EURUSD TECHNICAL ANALYSIS
TRADE SUGGESTION – BUY AT 1.04972, TAKE PROFIT AT 1.05834, SL AT 1.04772
AUDUSD TECHNICAL ANALYSIS
TRADE SUGGESTION– BUY AT 0.67942, TAKE PROFIT AT 0.68697, SL AT 0.67882
USDJPY TECHNICAL ANALYSIS
TRADE SUGGESTION- SELL AT 134.613, TAKE PROFIT AT 132.542, SL AT 135.303
HANG SENG INDEX TECHNICAL ANALYSIS
TRADE SUGGESTION – BUY AT 18907 TAKE PROFIT AT 19275, SL 18638
BRENT CRUDE OIL TECHNICAL ANALYSIS
TRADE SUGGESTION– SELL AT 86.33, TAKE PROFIT AT 84.36, SL 88.10
SILVER TECHNICAL ANALYSIS
TRADE SUGGESTION– BUY AT 22.750, TAKE PROFIT AT 23.122, SL AT 22.490
BITCOIN TECHNICAL ANALYSIS
TRADE SUGGESTION- BUY AT 17103.46, TAKE PROFIT AT 18179.34, SL AT 16571.19