Friday November 4th, 2022

The US$ weakens, oil prices rise, equity markets are up, while US yields are mixed on China reopening rally. Currency, commodities, and equities gained amid signs that the Chinese authorities are trying harder to ease the impact of its covid-zero policy and by news that US audit officials were ahead of schedule in on-site inspections of Chinese companies. Today sees a raft of economic data releases including the key US Nonfarm payroll for clues into the pace of future rate hikes from the Fed. Nonfarm is expected to fall to 200k in Oct from 263k Sept. Also, on today’s docket, BOE Pill Speech, US Average Earnings, US Unemployment Rate, CAD Net Change in Employment, CAD Unemployment Rate & CAD Ivey PMI which will help provide intraday direction to currency markets. In other news. US-Listed Chinese stocks soar on reopening hopes, audit process (Bloomberg). North Korea fires artillery and flies’ jets near boarder as South Korea & US pledge cooperation. Russia signals retreat in southern Ukraine but Kyiv fears trap. Xi tell Scholz China, Germany should set up cooperation in turbulent times. Israeli PM Lapid congratulates Netanyahu on election win. Russian attacks leave 4.5 million Ukrainians without power. Hong Kong’s benchmark Hang Seng Index was set for its biggest weekly jump since 2011. In Currency markets. CNY & commodity currencies rallies on speculation covid-zero policies will ease. US$ index eases on expectations of falling jobs data and improved risk sentiment. CNY strengthens 0.6%, while Asian currencies strengthen 0.4% on average vs US$. Trading currencies rebound with MXN firms 0.2%, JPY, SEK & CHF up 0.35%, NOK gains 0.65%, NZD & ZAR strengthen 0.9% and AUD rallies 1.1% vs US$.

Oil prices strengthen as the US$ eases and supply risks lingered, though recession fears and increasing Chinese covid outbreaks continue to cap rallies. C$ rallies in overnight trading as oil prices rise and the US$ eases on increasing speculation China will ease its covid-zero policy. Focus shifts to both the US & Canadian jobs reports which will help provide signals of the pace respective central banks future rate hikes. Support resets to 1.3600 while resistance lowers to 1.3735.

EURCAD drops to 6-week lows as strengthening oil prices help boost the C$. Support drops to 1.3300 while resistance lowers to 1.3500.

Euro stalls below .9800 ahead of US data and ECB President speech. Euro fails to take advantage of improving risk sentiment on the back of speculation China may ease its covid-zero policy. ECB Lagarde speech will be in focus today after her comments on Thursday failed to support the Euro. The increasing interest rate divergence between the EU and US – UK will have an impact on investor sentiment and keep the Euro on the back-foot. Intraday US Jobs will be the primary driver on Euro today. Support holds at .9685 while resistance remains at .9800.

GBPEUR edges higher on increasing interest rate differentials after the BoE hiked 75bps on Thursday. Support lowers to 1.1435 (.8745) while resistance lowers to 1.1550 (.8658).

GBP clings to 1.1200 as focus shifts to US jobs data. The pound is clinging to early gains, but the BoE’s gloomy growth outlook and cautious tightening outlook is keeping the pound under pressure vs US$. Focus shifts to the US jobs data today for intraday direction. Investors will remain cautious until they understand the reworked and costed budget from new PM Sunak and the Chancellor of exchequer Hunt expected mid-Nov. Support resets to 1.1150, while resistance lowers to 1.1300.