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  • richard evans

USD up ahead of US employment numbers

Good morning

US stocks ended higher yesterday and Asian markets followed suit. It seems to me that the Omicron variant, although transmissible, is not causing as many serious illnesses as feared. Far too early to be overly optimistic, lets face it we only learned of this new variant one week ago, but that’s the hope anyway. The Times has an article that suggests booster jabs could be critical against the Omicron variant, while Moderna says it may know within a week how effective its vaccine is against Omicron.

Germany are making life harder for unvaccinated people. They are banning unvaccinated people from shops and bars, while there is still talk of mandatory vaccinations in 2022. Ongoing concern that hospitals may become overwhelmed is driving the ban. I have said before that official data comparing numbers of vaccinated and unvaccinated people in hospitals may do a good job of persuading people to have the jab.

US nonfarm payrolls due out today, a headline figure around +550k seems to be possible, it will take a number considerably less than that to change current thinking that the Fed will increase the pace of tapering later this month. Feds Bostic and Quarles are the latest Fed members to voice support for a fast taper. Feds Mester has said that if Omicron becomes serious it could affect supply chains and labour shortages which in turn could put more upward pressure on inflation.

BoEs Saunders speaks this morning. Expect some hawkish comment as he was one of the members who voted for a rate rise last month and he may well be feeling vindicated in his views given the recent hawkish comments from the Fed. GBPUSD has traded lower this morning, currently 1.3270 while EURGBP is 0.8510 (GBPEUR 1.1750). EURUSD 1.1290. We looked yesterday at some downside GBPUSD ideas to get us over the next Fed meeting in mid-Dec which also took in the Dec BoE meeting.

Yes another Chinese property developer has seen its share price tumble after missing a $650 million repayment that became due owing to recent downgrades. China Aoyuan says it cannot guarantee it will be able to make future payments.

Aside from the US employment numbers, we have markit PMI numbers to look forward to today, as well as Canada employment data which is often overshadowed by its neighbour. USDCAD is up to 1.2830 having been down at 1.2350 in early Nov. USDCAD has proved very difficult to read recently, I have no doubt we will see USDCAD sellers at these levels and I wouldn’t be surprised to see stops building above 1.3000 which is pretty much the high we have seen for almost exactly a year.

Its pretty miserable outside today, perhaps slightly warmer than yesterday but certainly a lot wetter, the weekend doesn’t look like its going to improve a great deal. We do however have some football to look forward to. My young team are playing what could well be their toughest test of the season to date, a county cup match against a team who are themselves flying high in their league. Wish us luck.

Finally, as I have been writing this, I heard some machinery in use at the golf course across the road from me. I took a look to see what was going on, and ther eis a tractor blowing leaves off the course into the road. This surely isn’t legal. I would imagine I’d get in trouble if I dumped a load of leaves onto the road outside my house. Not only that, I spent an hour or so the other day sweeping up leaves in front of my house. No wonder there are so many, I reckon I’m getting half the leaves from the golf course blowing at me now. I’m really not happy about that. In fact I might just make a complaint….

- 08.30 ECBs Lagarde speks

- 09.00 EU markit services PMI

- 09.30 UK markit services PMI

- 10.00 EU retail sales

- 11.00 BoEs Saunders speaks

- 13.30 US nonfarm payrolls

- 13.30 CAD employment

- 14.45 US markit services PMI

- 15.00 US services ISM

- 20.30 CFTC position data

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