XM does not provide services to residents of the United States of America.

Daily Market Comment – Choppy markets brace for nonfarm payrolls



  • US jobs report could decide whether Fed pulls the QE handbrake
  • Euro trades heavy after German restrictions, commodity FX bleeds
  • Oil bounces even without OPEC support, gold grinds lower
Nonfarm payrolls coming up

The US employment report for November will dominate trading in financial markets today as investors grapple with whether the Fed will speed up the tapering process. Nonfarm payrolls are projected to clock in at 550k, pushing the unemployment rate down one tick to 4.5%. Wage growth is expected to have accelerated slightly. 

Labor market indicators were quite encouraging during the month. The ADP report showed 534k jobs being added in the private sector, the preliminary Markit PMIs pointed to a “solid” rate of job creation, the employment sub-index of the ISM manufacturing survey rose, and jobless claims fell during the NFP survey week. 

Blending everything together, the tea leaves point to another solid jobs report that is more or less in line with the forecasts. Considering also that American workers are quitting their jobs at a record pace in search for higher wages, the US labor market seems to be in pretty good shape overall. 

As for the dollar, the outlook remains bright. If the upcoming employment data and next week’s inflation report reaffirm the recent trends in the US economy, that could give the Fed the confidence needed to expedite the tapering process, putting the wind back into the sails of the reserve currency. 

A look around the FX market

The commodity dollars continue to bleed as worries over new restrictions have dampened the outlook for global growth, with the Australian dollar hitting fresh one-year lows today. The Reserve Bank of Australia is unlikely to turn the tide when it meets next week as current market pricing for three rate hikes next year seems excessive, considering the current state of the economy. 

Sterling has suffered a similar fate since Omicron entered the equation, despite recent speculation that this variant may turn out to be more infectious but less deadly. The euro initially found some relief as energy prices cooled, yet the recovery is not convincing while new restrictions threaten to hamstring economic growth. 

Germany just announced that unvaccinated people will be barred from restaurants and many shops. Euro/franc touched a new six-year low in the aftermath. The Swiss National Bank is almost certainly intervening to smoothen the descent, but it may need to roll out even bigger guns if it wants to change the course of this battle. 

Stocks bounce back, gold feeling blue

The mood in equity markets improved yesterday as bargain hunters came out in force, pushing the S&P 500 higher by 1.4%. That said, the environment could remain challenging until traders figure out exactly what Omicron means for riskier plays heading into year end, especially if the Fed pulls the handbrake on quantitative easing soon. 

Oil prices spiked lower after OPEC decided to stick to its planned production increases, but bounced back in the following hours as risk appetite improved to close the session higher overall. 

Gold refuses to participate in the volatility that has gripped other asset classes, grinding lower instead. The bulls are now praying that next week brings another US inflation surprise that sends investors scrambling for hedges and chases the blues away from bullion. 

Besides the US employment report, the ISM non-manufacturing PMI will also be released today. Additionally, the latest employment data out of Canada could be crucial for next week's Bank of Canada decision. 

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.