Payrolls grow at slow pace hitting optimism of US economic growth and driving huge swings in currency markets
Non-farm payrolls for November grew 245K jobs which is less than the 460K expected while prior month was adjusted lower. The news sent the US dollar lower in choppy trading as markets foresee reduced economic activity from more Covid lockdowns this winter. No significant updates on a stimulus package from Washington or on the UK/EU trade discussions. Oil price rebounds on an OPEC+ supply agreement strengthening the Canadian dollar to fresh two-year levels.
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December 4, 2020
EUR/USD 1.2168 GBP/USD 1.3524 USD/CAD 1.2818 AUD/USD 0.7437 USD/JPY 103.92 USD/CNH 6.5325 USD/ILS 3.2678 USD/MXN 19.8062 USD/CHF 0.8887 USD/INR 73.7887
The dollar heads toward a fourth consecutive day of losses on weaker than expected jobs data for November. A weaker economy would likely increase pressure on politicians to pass additional stimulus. FX markets see stimulus as helping the US economy thereby boosting the dollar, but at the same time would remove uncertainty hurting the USD safe haven status. The final reading of Durable Goods Orders for October to be released later this morning.GBP
The pound is flat relative to the dollar as investors await news of a UK/EU trade agreement. Many see this weekend as the last chance to get a deal done thereby allowing time for countries to ratify the agreement before the December 31 deadline. France has said they may veto any deal found to be lacking. Trade between the UK and EU would default to World Trade Organization standard terms leading to a massive disruption to imports/exports come January.EUR
Uncertainty around next week’s European Central Bank meeting and the UK/EU trade discussions led to high volatility for the euro. Hungary has announced that they won’t end the bloc on budget discussions unless Brussels drops its rule on tying spending to upholding democratic values. The comments made by Hungary’s prime minister dent the prospects of a deal at next week’s EU summit.CAD
November job creation in Canada came in at 62K which is much better than expected (20K) sending the Canadian dollar to new highs.
News of a production agreement amongst the OPEC+ countries has led to the price of oil breaking out of its $36-$43/bbl range since June. Essentially, OPEC will slowly increase production back to pre-Covid levels reviewing supply needs on a monthly basis. Oil traded up to $46/bbl for WTI.ASIA/PACIFIC
The Chinese renminbi fell through the 6.52 level for the first time since summer 2018 on overall US dollar bearishness.
The Japanese yen again hit major support at 104 as uncertainty around the US economy drove some investors into safe haven assets ahead of the weekend.
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