The markets are relatively calm. The SP500 set a new 55th historical record this year, gaining a mere 0.05 percent. In Europe, DAX overcame the psychological level of 2000 points and today it “opened” with a slight upward gap. The French benchmark is also catching up, but its position is decidedly worse. Europe’s number one topic is still politics of the country across the Seine. Today, a vote will be held on a motion of no confidence for the current government. Events in South Korea have introduced some risk aversion in Wednesday’s Asian session but in no way are they affecting the mood in the Old Continent.
Markets are closely watching macro data. The attention of investors is slowly being directed towards Friday’s NFP report. For the Fed, labor market data is as important at this moment as inflation data and will likely be crucial before the upcoming decision on interest rates, which is scheduled for 18th of December. A month ago, we received terrible readings, which were greatly affected by one-off factors. Worse data from last month (12,000 new jobs) were mainly caused by hurricanes Helene and Milton as well as strikes at the Boeing aircraft factories. The unemployment rate remained unchanged at 4.1 percent. Additionally, the recession index according to the Sahm rule has decreased.
Current estimates indicate that roughly 200,000 new jobs should have been created in November. If the data improves compared to October’s results, it will mean that cooling in this area is progressing gradually, in line with Fed’s expectations.
Yesterday, according to the JOLTS survey, the number of job vacancies exceeded forecasts and was 7,744 million. The voluntary job quit rate did rise slightly but it still remains relatively low. Remember that these data refer to October when one-off factors had a significant impact. The dollar reacted with an appreciation but it was short-lived. The EUR/USD pair was consolidating in the range of 1.0490 to 1.0530. Today, the focus is on the ADP report, which will provide information about changes in employment in the private sector. According to forecasts, it may increase by 158,000 which is worse than the October result (233,000). However, remember that correlation of this report with NFP is quite low. Therefore, the volatility should be limited during the publication.
The Euro might experience downward pressure in the event of a negative development in France. If the government of Prime Minister Barnier were to fall, a decline in the CAC40 index and the EUR/USD pair would be highly likely. Therefore, investors should be prepared for a potential increase in risk aversion in Europe. This sentiment could “bump into” other trading floors of the Old Continent.
Author: Łukasz Zembik, Oanda TMS Brokers
Source: https://ceo.com.pl/spokoj-na-rynkach-sp500-bije-rekord-dax-przekracza-2000-pkt-uwaga-na-dane-nfp-i-sytuacje-we-francji-36430
