After a string of consecutive daily gains in the Dollar Index (USDX), some profit-taking is likely, with the index retreating 0.51% from its recent two-week highs and ahead of key employment data that could pave the way for the next steps. to the Federal Reserve Bank.
Moderate gains were observed in major US stock indices, with the US 500 and US 30 indices rising by 0.65% and 0.13%, respectively, while the US Tech 100 rose by a sharp 1.29% on the back of strong gains in the seven weeks. The main major technology companies are Apple, Microsoft, Meta, Amazon, Alphabet, Nvidia, and Tesla.
In other news, Bank of Japan Governor Kuroda outlined alternative monetary policy options that would help the bank move away from the current ultra-low interest rates. Following this news, the Japan 225 Index recorded a sharp decline as this was taken as a signal of possible policy tightening.
The two main oil indices, West Texas Intermediate Crude Oil and Brent, have recorded a moderate recovery, rising by 0.42% and 0.39%, respectively, but may appear to be heading towards a seventh consecutive weekly loss. On a weekly basis, both contracts recorded a decline of more than 4% as of Friday at 07:30 am GMT, with continued concerns about the health of the Chinese economy and with some investors concerned that OPEC+’s voluntary supply cuts will not be enough to support prices. However, some support was seen early on as Saudi Arabia and Russia called for more OPEC+ members to join the production cuts.
US Employment Report: Impact on Monetary Policy
In the spotlight are a series of reports from the US employment sector including among others the long-awaited average hourly earnings, unemployment rate and Non-Farm Employment Change data which could shed some light on the way forward for the Fed’s monetary policy. . In addition, UK consumer inflation forecasts, preliminary consumer confidence data from the University of Michigan and US consumer expectations are also scheduled for release. On the earnings front, Hello Group publishes its quarterly results today.
The EUR/USD pair rose, ending the session 0.22% higher, supported by the weakness of the US dollar amid risk appetite.
Data from the US Department of Labor on Thursday revealed that US weekly initial jobless claims for the week ending December 1 rose to 220,000, below market expectations of 222,000. Continuing claims fell to 1.861 million from 1.925 million.
The eurozone economy slowed unexpectedly in the third quarter of 2023. GDP came in at 0% year-on-year versus 0.1% previously, worse than expectations.
Investors will be watching the US employment report later today, including the Non-Farm Payrolls (NFP) report, the unemployment rate, average hourly earnings, and the University of Michigan Consumer Confidence Index.
Gold: Gold prices rose due to the weakness of the dollar in the period preceding the release of non-farm payrolls data in the United States, with traders hoping for signs of weakness in the labor market to enhance the chances of an interest rate cut by the Federal Reserve (the US central bank).
The yellow metal had accelerated to record levels at the start of the week, supported by a mix of interest rate cut bets and safe-haven demand.
Oil Price Decline: Global Market Impact
Oil prices fell to their lowest levels in six months, with investors concerned about slowing energy demand in the United States and China while production from the United States remains near record levels.
Chinese customs figures showed that crude oil imports in November fell by 9% compared to the same period last year, a reading that exacerbated concerns about demand in the country and limited oil price gains.
Markets were also concerned about a higher-than-expected increase in US gasoline inventories, indicating faltering demand in the world’s largest oil consumer. US gasoline futures fell to their lowest levels in almost two years after data that also showed a larger-than-expected decline in total crude inventories over the week ending December 1.
US 500: US stocks rose after the close on Thursday, as gains in the technology, consumer services and communications sectors led stocks to rise. At the end of trading on the New York Stock Exchange, the US 30 Index added about 0.13%, while the US 500 Index added about 0.65%, and the US Tech 100 Index added about 1.29%.
Alphabet shares rose more than 5% during the day after the company unveiled its latest artificial intelligence model, Gemini.
The number of Americans filing for unemployment aid for the first time came in at a seasonally adjusted 220,000 last week, up slightly from 219,000 for the week ending Nov. 25, data showed. This indicates a soft labor market, although the November Nonfarm Payrolls report will take center stage. While the central bank is widely expected to keep interest rates unchanged when it meets next week, its outlook on monetary policy, especially when it plans to start cutting interest rates, remains uncertain.
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