WEEK 48 WRAP – Forex Market Analysis: Fri 2nd Dec 2016

Analysis written BY retail traders FOR retail traders

OVERVIEW

•Sources at the ECB said they are likely to extend their bond purchases beyond March, with discussion over whether to reduce the monthly amount.
•Canadian employment increased by 10.7k in November, beating forecasts for a decline of 15k.
•178,000 jobs were added in the U.S in November, higher than expected after 202,000 jobs were added the month previous.

 

HIGHLIGHT

Unemployment in the U.S. fell unexpectedly to 4.6% last month, its lowest level in nine years. Levels have dropped for the wrong reasons as many unemployed gave up looking for work.

US DOLLAR

The Dollar is slightly weaker and under pressure today as disappointing average earnings fell 0.1% last month. Whilst a rate hike is fully priced in for this month, still tepid wage growth potentially adds to the argument for letting inflation “run a little hot”.

 

BRITISH POUND

The Pound is higher today although it’s against the context of a late sell off from yesterday that unwounded the day’s gains. Brexit minister, David Davis, supported by the finance minister, stated yesterday that they have somewhat alleviated concerns over a ‘hard Brexit’.

 

EURO

The Euro is lower on the day as we head into the Italian referendum and Austrian presidential election re-run. The single currency did manage to strengthen yesterday on comments around the ECB looking to signal an end to Q.E. in the next year. However, this weekend’s events could potentially see the Euro weaken substantially next week.

 

CANADIAN DOLLAR

The Loonie is at a 4-week high against the US Dollar after a second straight month of forecasts beating job reports and higher oil prices following an OPEC agreement to cut overall production.

 

AUSTRALIAN DOLLAR

The Aussie Dollar is higher today, recovering from yesterday’s commodity linked sell off. The Reserve Bank of Australia meet next week, expecting to signal that rates will remain on hold for the near future.

 


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