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market review 04 December 20

04 December 20

Dollar bounces amid vaccine, stimulus concerns ahead of Nonfarm Payrolls

The dollar has stabilized after suffering a downfall on Thursday. One of the reasons for the dollar’s comeback and the cooling in markets has been a drop in chances for a stimulus package. Senate Majority Leader Mitch McConnell said he still prefers a small relief deal rather than the large, near $1 trillion one.

The US Nonfarm Payrolls report for November is set to show an increase of 469,000 jobs, down from 638,000 in October. The Unemployment Rate is set to decline from 6.9% to 6.8%. Investors want to see if the recovery is still on track or if the second wave of the virus has hurt job growth.

Brexit: UK officials said that the prospects of a deal have receded after the EU toughened its positioned in response to fresh demands from France. After intense talks in London, Chief EU Negotiator Michel Barnier will return to Brussels for quick consultations. GBP/USD is off the highs near 1.35 but has retreated.

WTI Crude Oil has jumped above $46 after OPEC+ members agreed to extend production cuts into 2021 following long days of talks. Gold is holding onto gains and changes hands at around $1,840.

Similar to the US, Canada is also projected to report fewer jobs gained in November. The jobless rate is set to remain at 8.9%.

Brexit: French official says there is risk of a no-deal outcome, GBP/USD falls

The French Junior European Affairs secretary Clément Beaune has said there is a risk there will not be a Brexit deal. He added that Paris would veto any deal it does not deem satisfactory, confirming reports of denial from Paris, first circulating early on Thursday.

GBP/USD has responded with a quick 20-pip fall from 1.3470 to around 1.3450. The low for the day is 1.3436. The US dollar remains on the back foot against other currencies. On Thursday, cable flirted with the 1.35 level, the highest since December 2019.

AUD/USD: Near-term consolidation likely – Commerzbank

In light of the recent price action, AUD/USD could now move into a consolidative phase, noted Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank.

Key Quotes

“AUD/USD has taken out all nearby resistance levels and but the daily RSI has not yet confirmed the break higher. We would allow for some near term consolidation and today will just stand aside. Beyond some consolidation we look for a move to the long term Fibonacci retracements at .7574 and .7639. These are the break points longer term for the 2018 peak at .8135.”

“Initial support is offered by.7332 the 20 day ma ahead of .7255, the November 19 low, and the 55 day moving average at .7203.”

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