2nd December 2021 - US ADP Employment Change rose foreseen by analysts, NFP eyed

Market Headlines

US equities partly recovered, buyers taking advantage of recent cheapening. The S&P500 is up 0.4%, although that sentiment didn’t ripple to currencies or bonds. The second day of testimony from Fed Chair Powell largely repeated yesterday’s key messages, emphasizing the likelihood the FOMC will accelerate the pace of tapering, as well as highlighting persistent inflation pressures. WHO said that current vaccines do appear to be effective against the omicron variant, although further information on its communicability, morbidity and severity of symptoms is unlikely for another 10 days.

The US dollar index is unchanged on the day. EUR ranged sideways between 1.1303 and 1.1360. USD/JPY fell from 113.63 to 112.70. AUD fell from 0.7173 to 0.7115. NZD fell from 0.6868 to 0.6825. AUD/NZD fell from 1.0460 to 1.0424. US 2yr treasury yields fell from 0.61% to 0.56%, while the 10yr yield fell from 1.50% to 1.43%. Markets fully price the first Fed funds rate hike to be in July 2022.

Australian 3yr government bond yields (futures) fell from 1.12% to 1.08%, while the 10yr yield fell from 1.76% to 1.68%. Markets fully price the first RBA rate hike to be in July 2022. Commodities, Brent crude oil futures rose 0.5% to $70, copper fell 0.6%, gold rose 0.3%, and iron ore rose 0.5% to $103.

Overnight Currency Range

AUD/USD 0.7105 0.7172

EUR/USD 1.1303 1.1360

GBP/USD 1.3276 1.3352

USD/JPY 112.67 113.63

NZD/USD 0.6817 0.6867

USD/CAD 1.2712 1.2828

USD/CNH 6.361 6.3730

AUD/JPY 80.11 81.47

AUD/NZD 1.043 1.0457

AUD Thoughts

In the overnight session, the AUD/USD pair recovered most of Tuesday’s losses, peaking at around 0.7172. However, as the European session got underway, it retested the 50-hour simple moving average around 0.7140 but bounced off that level, printing another leg-up, ahead of the testimony of Fed’s Chair Jerome Powell and Treasury Secretary Janet Yellen, before the Congress.

Another quieter day in regard to economic releases with investors looking toward tomorrow’s employment report from the US as the next main driver of sentiment. The further spread of the Omicron strain is also expected to be monitored after the overnight news of cases in the U.S saw a significant risk reversal. Reports so far seem to suggest quite mild symptoms but being so early in its discovery we will need to wait for further information before drawing any conclusions.

AUD/USD traded in a 0.7109/0.7172 range overnight with demand still expected ahead of 0.7050 while offering interest has likely been lowered to the 0.7170 region.

Event Risk Data Today

Australia: Housing finance approvals are expected to lift in October as house prices continue to rise and turnover increases on reopening (f/c: 4.0%). A narrowing of the trade surplus is anticipated in October due to a rebound in imports and a further pull-back in export earnings as a result of falling iron ore prices (f/c: $10.8bn).

NZ: In Q3, the terms of trade are expected to lift further with price gains for commodity exports outstripping those for imported goods (f/c: 2.0%).

Eurozone: Strength in employment growth should continue to see the unemployment rate gradually fall in October (market f/c: 7.3%).

US: Initial jobless claims are anticipated to stabilise after recently hitting multi-decade lows (market f/c: 240k). The FOMC’s Bostic will discuss the high cost of housing at a virtual conference hosted by the Atlanta and Dallas Feds, and will then take part in a discussion at a virtual Reuters event. Quarles will share his departing thoughts to the American Enterprise Institute, while Daly and Barkin speak at the Peterson Institute.

Recent Posts

See All


This material is provided by Navigate Global Payments (Navigate) ACN 615 699 888, AFSL 502711.  The material contains general commentary only and does not constitute investment or any other advice.  Certain types of transactions, like futures, options and high yield securities can be risky, and not suitable for all investors.  This information has been prepared without considering your objectives, financial situation or needs.  Please seek your own independent legal or financial advice before proceeding with any investment decision.  The information is believed to be accurate at the time of compilation and is provided in good faith.  Navigate does not warrant the accuracy or completeness of any information contributed by a third party. The information is subject to change without notice and Navigate is under no obligation to update the information. The information contained in this material are opinions of the author at the time of writing and does not constitute an offer, recommendation to act, a solicitation of an offer, or an inducement to subscribe for, purchase or sell any financial instrument or to enter a legally binding contract.  This information, including any assumptions and conclusions is not intended to be a comprehensive statement of relevant practise or law that is often complex and can change.  Past performance is not a reliable indicator of future performance. Any forecasts given in this material are predictive in character.Navigate Global Payments Pty Ltd nor its related parties or officers accepts no liability whatsoever for any loss or damages suffered through any act or omission taken as a result of reading or interpreting any of the information contained or related to this site.