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North America
On December 3, 2020, there will be forex news for North American traders. The major European indexes are closing in the red.
Goldman Sachs anticipates the taper to be doubled in December. A peek at the markets as traders respond to drastically falling stock prices.
More from Fed Chairman Bullard: Wants to have “live meetings” on the likelihood of a rate rise as soon as possible.
US stock indexes fall. The NASDAQ index is leading the charge. ISM November services PMI index 69.1 vs 65.0 expectation.
Fed’s Bullard: Too much inflation is a risk The preliminary Markit PMI composite index for November was 57.2, compared to 56.5 in October.
Bullard of the Federal Reserve: The Fed should eliminate monetary policy accommodation.
According to a U.S. Treasury currency study, no major trading partners manipulated exchange rates.
Canada • Nonfarm payrolls in the United States increased by 153.7K in November, compared to an expected increase of 35.0K• The EUR is the strongest and the AUD is the weakest as NA traders begin for the day, with the US November nonfarm payrolls 210K versus 550K expected.
Today’s focus was on US employment statistics, and while payrolls were lower than projected (210K against 550 predicted), there was still some underlying increase. The prior month’s changes added 82K. The unemployment rate fell from 4.5 to 4.2 percent. The participation rate rose from 61.6 to 61.8 percent, while the underemployment rate fell from 8.4 to 7.8 percent.
Wages continue to rise, although at a slower rate than predicted, at 4.8 percent year on year vs a 5.0 percent forecast.
Despite some weakness, the market appears to be more focused on what happened earlier this week when Fed Chair Powell shifted his long-held conviction that inflation was transitory to one that it is now not transitory but is anticipated to last until 2022. As a result, he favours a faster taper starting in December and is open to tightening earlier as well.
Other Fed officials have joined in, and it looks that tapering will be escalated to at least $30 billion at each December meeting. Keep in mind that the present rate of bond buying is still $105 billion per year. The Fed will conclude tapering at a monthly rate of $30 billion by the May 4th meeting, clearing the path for the first tightening as early as June.
Rates jumped this week at the short end in reaction to the new outlook, while declining at the long end. The two-year yield has rebounded to 0.65 percent after falling as low as 0.441 percent on Tuesday. Meanwhile, the 10-year yield dropped to 1.387 percent in trading on Wednesday, its lowest level since September 23. The spread between two and 10 years is presently trading at less than 80 basis points.
London/European merchants are leaving. Today, the NASDAQ index is down -2.70 percent and has fallen below its 100-day moving average of 15081.67. The S&P 500 is also down, although just by 1.46 percent. The index is still trading above its hourly 100-day moving average of 4491.12. After trading up more than 1% earlier in the day, European indexes close down.
The CHF is the strongest currency in the forex market, while the AUD is the weakest.
S&P Index
At 4544.67, the S& P 500 index has fallen below its 50-day moving average. The current price is 4534.64. This is a decrease of 42.2 points or -0.92 percent.
Both Wednesday and Thursday, the index traded below the 50-day moving average but rose after nearing the 100-day moving average of 4491.18 and found dip buyers ahead of that crucial moving average. In September and October, the price fell below the 100-day moving average. From a technical standpoint, a move below it would be more negative.
The NASDAQ index is currently down more than 2%.
USDJPY
Following the release of the employment report, the USDJPY, like other currency pairings, experienced dollar selling. The low price hit 112.98, barely over the Asian session low of 112.954. The price turned back upward, extending back over the 100-hour moving average at 113.232. That moving average was broken (to the upside) in the early European session, and it was retested later in the morning session (held on the first test). Longs seeking additional upward momentum in the pair should now consider the 100-hour moving average as a danger threshold.
The price has reached a new session high of 113.60. The next objective is at 113.666, which corresponds to a 38.2 percent retracement. On Tuesday, the price jumped upward due to dollar purchasing, but then halted at the 50% retracement level before spinning back to the downside. Gaining and maintaining above the 38.2 percent retracement objective would be required to improve the positive bias. On Monday, the swing high for the week was 113.95. This is quite close to the declining 200 hour moving average of 113.966. Getting above those levels (and the 50% midpoint at 114.019) is another important target region if buyers want to gain greater control.