Thursday December 2nd, 2021

The US$ dips, oil prices firm, equity markets weaken, while US yields firm as focus shifts to Friday’s US jobs report. Currency markets consolidated after the Fed Chair repeated his remarks on the Fed’s policy outlook on the 2nd day of his testimony as markets shift their focus to Friday’s key US Jobs report. Today Omicron updates, the OPEC meeting, and the US Initial Jobless claims (expected 240k) will provide intraday direction to the currency markets. In other news. The US Secretary of State Blinken said that the US & NATO fully are committed to Ukraine ahead of talks with his Russian counterpart. China’s test of a hypersonic weapon raised regional tensions the US defense chief says. Concern rises as a showdown looms in Congress over a debt limit default, passing of the defense bill and finalizing the Dem’s signature tax and spending bill. Covid. The US tightens travel testing requirements and mask mandates as part of broader plan to fight the Omicron variant. Omicron could become the dominant covid-19 variant in France by the end of January say’s top scientific adviser. GSK says test indicate antibody drug works against the new Omicron variant. In currency markets. The Turkish Lira weakens 1% as another new finance minister is appointed. Russian RUB firms as oil prices rebound, ZAR recovers after Omicron driven fall and China CNY is off 6-month highs after a weaker Fix. CNY down 0.1% while Asian currencies are down 0.2% on average vs US$. Trading currencies are mixed with JPY down 0.17%, NOK tumbles 0.9% while AUD & NZD are flat, MXN firms 0.8%, and ZAR rallies 1.1% vs US$.

Oil prices firm 1% as markets focus on day-2 of the OPEC+ meeting to see if the group will release more oil or restrain supply amid the recent weakness in oil prices. C$ holds near recent lows as weakness in oil prices is keeping pressure on the loonie. Canada Manufacturing PMI dipped to 57.2 in November, with no economic releases today investor focus shifts to Friday’s CAD unemployment data. Intraday OPEC+ decision/oil prices will remain the primary driver for C$ today. Support holds at 1.2745, while resistance resets at 1.2837, if breached look for a potential move to 1.2895 (Sept20th).

Euro consolidates over 1.13 vs US$ as markets focuses on Friday’s US NFP. Uncertainty over the Omicron variant, hawkish Fed comments and the ECB status quo on rates will likely keep the Euro capped vs its peers. Intraday markets will likely remain sidelined preferring to focus on Friday’s key US NFP report. Support holds 1.1285, with resistance at 1.1365.

EURGBP dips as caution returns with the prospect of fresh lockdown restrictions across the EU and the prospect the ECB will lag its peers in raising interest rates. Support rises to .8440 (1.1848) while resistance at .8550 (1.1695)

GBP steadies above 1.33 but looks vulnerable for further weakness. A combination of Brexit and Interest rate concerns continues to keep pressure on the pound. An FT article highlighted that a failure to resolve the outstanding issues with the Northern Ireland Protocol could impact a future US/UK trade deal. Investors are also reassessing the possibility of the BoE opting for a smaller-than-20 basis points hike in December. Support holds at 1.3275 with resistance remaining at 1.3360.