US equities nudged higher, the S&P500 up 0.2% to a fresh record high. The defensive US dollar fell, although so too did bond yields, There was some progress in US fiscal relief talks. Commodities, Brent crude oil futures rose 1.1% to $48.80, copper rose 0.1%, iron ore rose 1.0% to $137.95 – a fresh seven-year high, and gold rose 0.4%.
AUD/USD: 0.7409 – 0.7449 (two-year high)
EUR/USD: 1.2101 – 1.2174 (fresh three-year high)
GBP/USD: 1.3353 – 1.3500 (one-year high)
USD/JPY: 103.68 – 104.53
USD/CAD: 1.2865 – 1.2941
NZD/USD: 0.7051 – 0.7104 (fresh three-year high)
AUD/JPY: 77.18 – 77.53
AUD/NZD: 1.0477 – 1.0515
The US employment report for November is to be released this evening. Figures will reflect the week of the 8th to the 14th, so may not fully encompass impacts from the state level restrictions that have come into effect more recently. As was the case in October, we expect the decline in Census temporary workers will weigh on the monthly headline payrolls figure by ~90K.
The relentless grind higher in the AUD/USD continued overnight helped largely by the generally weaker USD. The high was 0.74495 with further offering interest expected ahead of 0.7500 and again at 0.7515 while demand his likely followed spot higher and now rests ahead of 0.7400.
Event Risk Data Today
Australia: The preliminary estimate of October retail sales revealed a 1.6% increase – the 5% surge in Victoria was a little surprising given that restrictions were not being fully relaxed until November. The market expects that the final print will remain unchanged (Mkt f/c: 1.6%).
New Zealand: The market is forecasting a 33% rise in Q3 building work, with bounce backs in both residential and non-residential work following the easing in Covid-related restrictions. Risks are to the upside, due to possible catch-up activity.
US: The November employment report is due, and the market expects non-farm payrolls will increase by 450k (consensus 475k). That would see the unemployment rate hold at 6.9% (consensus 6.8%). Risks are to the downside, with ADP employment coming in under expectations and initial claims posting consecutive increases. With considerable slack in the labour market, average hourly earnings are likely to remain weak for an extended period (Mkt f/c: 0.1%). The October trade balance is expected to show that the deficit continued to widen (market f/c: 64.8bn). Factory orders should expand 0.8%, but investment remains in limbo against the uncertain backdrop. Finally, the FOMC’s Bowman (02:00 AEDT) and Kashkari (03:00 AEDT) will speak.