Forex Signals Brief December 5: Powell Watching ISM Services and Jolts Jobs Closely Today
The emphasis yesterday was risk aversion, after several weeks of positive sentiment in financial markets, which probably came after the pump-and-dump in Gold. Everything that was making gains last month reversed, including stock markets. XAU/USD skyrocketed to around $2,145 before stalling and plummeting more than $120 from the top.
Bond yields also reversed and US 10-year Treasuries gained around 10 points which aided the USD, as the market gave a reconsideration of the aggressive FED easing for next year which has already been priced in. EUR/USD resumed the decline from last week and reached 1.08 lows.
USD/JPY also continued to fall to an eight-week low, as risk sentiment remained negative, but then rebounded higher in turbulent activity. AUD/USD declined nearly 90 pips as commodity dollars lost all of their Friday gains, owing in part to an intensifying trade battle between the United States and China. Regarding the economic data, inflation continued to slow in Switzerland, while US facoru=y orders posted a decent decline, although that should be undone in the coming months.
Today’s Market Expectations
Today started with the CPI (consumer price index) inflation report from Japan, which showed a cool-off from 2.7% to 2.3%, beating expectations of 2.4%, which was also bigger than the jump the previous month. The Reserve Bank of Australia came next, which was anticipated to keep rates unchanged at 4.35% after raising it by 25bos last month. The RBA has sounded hawkish recently but they kept rates on hold this time with the economic data weighing toward weakness, with PMIs falling further into contraction.
Later we will have some important employment reports from the US, with the ISM Services predicted to rise to 52.0 points from 51.8 points in the previous meeting. The Services PMI exceeded expectations last week, but companies reduced their workforce for the first time since June 2020, affecting both service providers and goods producers, so we’ll see how the ISM numbers come out.
The JOLTS job opening will also be released today, with the number of job openings predicted to soften to 9.350 million from 9.553 in November million in October. The labor market has been softening recently, and despite the volatility in Job Openings, the trend seems to be down. This will be the first significant US labor market report of the week, which might induce some volatility.
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