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Markets Await U.S. Nonfarm Payrolls

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On Thursday, oil prices rose by 4%, as Brent crude touched its highest level in around 16-months, extending gains after the Organization of the Petroleum Exporting Countries (OPEC), and Russia agreed to cut output to reduce the global supply glut as quickly as possible.

The deal also included OPEC's first coordinated action in 15 years with Russia. Azerbaijan said it was also willing to discuss cutting output.

U.S. crude settled at $50 a barrel after the announcement, and could decline to $51. Technically, crude is expected to touch $55 over the medium-term.

The Greenback declined vs. a basket of currencies as the number of Americans applying for first time unemployment benefits rose last week to the highest level for more than 5-months.

The U.S. dollar index fell as much as 0.5% yesterday and settled at 101 pips. Markets are awaiting U.S. Nonfarm payrolls, which is expected to rise by 165k and the unemployment rate to hold steady at 4.9%. This is the final reading before the Fed's decision on raising interest rates, which could greatly affect the Fed's decision on monetary policy.

Also on Thursday, Gold settled to its lowest level since February, extending losses after its biggest monthly decline in more than 3-year, as a rise in oil prices supported bond yields, denting interest in non-yielding gold as an alternative investment. The yellow metal fell as much as 8% in November, negatively affected by a strong U.S. dollar.

The precious metal pared its losses later and settled above $1,170 in anticipation of U.S. Nonfarm payrolls.

Euro settled to $1.0650 vs. USD as Eurozone unemployment rate fell to the lowest in more than 7-year in October. Technically, the single currency could jump to $1.07 vs. the Greenback. A constitutional referendum will be held in Italy on Sunday 4th December 2016. Italians will cast their vote in relation to whether they approve of amending the Italian Constitution.  Prime Minister Matteo Renzi wants to streamline Italy’s political system so he can push through a major economic reform package. Any decision made, could have significant implications for the political and economic future of Italy and the EU.

The most important economic events:

  • USD Unemployment Rate (NOV): (GMT 15:30) – Important – Forecast (4.9%) – Previous (4.9%).
  • USD Change in Non-farm Payrolls (NOV): (GMT 15:30) – Important – Forecast (180K) – Previous (161K).

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