The U.S. Dollar is trading in mostly tight ranges across the board as markets overnight had a bit of resurgence as risk-aversion faded.
OvervieFX flows are calm ahead of plenty of data to chew throughout the week as numbers from the previous three months keep pouring in and Fed officials are monitored for their comments. In testimony to congress, the Fed’s main regulator, Michelle Bowman, explained to Congress that she is working on regulatory framework to handle stable-coins. The news seems to have been a spark for Bitcoin and crypto-related ETFs, which had been dwindling assets in recent weeks after tremendous enthusiasm experienced at start of the year. Meanwhile, S&P 500 futures are on the rise after a negative Monday that soured the exchange’s best week since May.
Tomorrow we are guaranteed to get figures released for Industrial Production from September as well as November Purchasing Managers Index, which will help gauge demand amongst suppliers. The key labor figure will be ADP Employment Change which has a very low expectation of just 5K payrolls added. We will also get eyes on the Institute of Supply Management’s Services measures. The main inflation gauge to watch out for will be Personal Consumption Expenditures on Friday. For now, the Buck is back down to trading around levels seen mid-November.
S&P 500 Futures are down along with Bitcoin, which is now trading at a price below $86K. This morning is being carried by reports overnight that the Bank of Japan may be willing to act “hawkishly” and choose to hike interest rates. The prospect of a higher borrowing costs seems to be affecting risk-appetite when it comes to equities and anything else that is not considered a safe-haven asset. Gold is already up $18.00 while yields for Japan’s 2-year treasuries have hit their highest since 2008.
Meanwhile, the odds of a move by the Fed on our side have jumped dramatically in the past two weeks. The chances that the Fed will cut by 25 basis points at their December 10th meeting stand at 99.0% during writing. They stood at just 29.3% on November 19th, at the peak of worry over the government shutdown’s effects on preventing analyzing data for September and October. This week will be impacted by data points from al over the place, with Chinese Purchasing Managers Index already souring markets coming in below a reading of 50.0, which indicates expansion, highlighting contractions for the eighth month in a row. S&P Manufacturing PMI for November PMIs will be out at 9:45AM and Institute of Supply Management gauges will be out at 10AM.
What to Watch This Week…
- PCE Composite on Friday 8:30AM
- S&P PMIs tomorrow 9:45AM
- ADP Employment Change Tomorrow 8:15AM
- Monex USA Online is always open
EUR ⇑
The Euro is trending up against the Buck following higher inflationary readings than anticipated. Although prices contracted for the month of November as expected, the overall annual average climbed to 2.2% per the CPI Estimate YoY. Since prices are tamed and the average is hovering around the European Central Bank’s target, it is unlikely that ECB officials will feel the need to decrease interest rates unless they get more evidence of struggle in growth. With the recent Gross Domestic Product numbers showing expansion, the shared currency could return to gains as a potential for a peace deal in Ukraine bode well for economic activity going forward. A third reading of GDP for Q3 will be out on Friday with a 0.2% estimate.
CAD ⇑
The Canadian Dollar is holding steady after losing some ground yesterday that cooled a resurgence for “Loonie” that began a week ago. CAD had jumped to its strongest level over the Buck since end of October after a surprise in economic growth per Q3 GDP. Annualized third quarter advancement came in at 2.6% when only half a percent was forecast. Tomorrow, we get November PMIs, which could move the needle but the biggest risk event for CAD comes Friday with labor in the form of Net Change in employment for the month prior.
