- USD (USDIndex 94.00) holds at highs but down from Thursday 94.50 high. Strong US data on Friday (ISM Manu PMI 61.1, PCE 4.3% & UoM 72.8. Its NFP Jobs and Pandora Papers week.
- Yields hold at recent highs (10yr closed 1.465%) now at 1.47% in Asian trades (huge spike to 1.567% last week cooled but Yields “on notice”) China closed until Thursday, HK Property group (Hopson) has offered $5bn for 50% of Evergrande Real Estate. Contagion still a worry.
- Equities rallied on Friday, (Merck +8.37%) anti-viral drug Covid drug) USA500 +49.0 (+1.5%) at 4357 (but remains weak) USA500.F lower 4330. Asian equities mixed. VIX closed at 21.20 Friday – trades at 22.15 now.
- USOil holds at $75.20 ahead of today’s OPEC+ which is expected to agree “gradual” production increases, amid supply bottlenecks and inventory drawdowns.
- Gold holds at $1760 following last weeks collapse to $1720 as yields rocketed. 20-day MA $1765.
- FX markets USD bid – EURUSD 1.1600, Cable 1.3550, & USDJPY 111.00.
Week Ahead – RBA Rate Decision – (less Dovish ? but with Covid cases still climbing) Jobs Week – RBNZ Rate Decision (delayed rate hike coming?), Jobs week NFP – (460k vs 235k), ADP 430k vs 374k & Claims 350K vs 362k. Plus more PMI data.
European Open – The December 10-year Bund future is up 8 ticks at 170.30, Asian stock markets traded mixed, but DAX and FTSE 100 are up 0.4%, in catch up trade, after news from Merck lifted Wall Street on Friday. The boost, which also seemed to underpin the outperformance of the ASX in Asia seems to be waning though as China angst and mutterings of stagflation fears weigh on sentiment.
Today – EZ Sentix Index, US Factory Orders, ECB’s de Guindos, de Cos, Fed’s Bostic & Bullard, OPEC+ and Eurogroup meetings.
Biggest Mover @ (06:30 GMT) CADJPY (+0.24%) Continued Friday’s rally from 87.20 low to test resistance at 88.00 again. Faster MAs aligned higher, MACD signal line & histogram rallying higher, RSI 55.50 and neutral. H1 ATR 0.157, Daily ATR 0.882.
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Stuart Cowell
Head Market Analyst
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