News

Oil Inches Higher on OPEC+; Dollar Falls Further ahead of Jobs Data

Oil

Oil prices edged higher following the OPEC+ meeting. Top oil producers decided to ease output cuts by 500 thousand barrels for three months while meeting every month to make sure everyone is compliant with the plan. The initial plan reached was to add 1.9 million barrels to the markets, by easing cuts from 7.7 million barrels to 5.8 million barrels, starting January. However, due to the second wave of Coronavirus, the demand is still shy in some regions around the world, mainly Europe. On the other hand, the hopes of reaching a compromise on fiscal stimulus in the United States boosted the rally. The West Texas Intermediate crude January delivery rose to $46.54, and Brent Blend February delivery rallied to $49.88.

USD

The dollar index, which measures the performance of the United States dollar against a basket of the world's major currencies, extended the downside rally, falling to 90.51, the lowest since April 2018. The optimism over fiscal stimulus and vaccine distribution supported the flow towards riskier currencies in the past week, leading the dollar to sharp losses. On the other hand, the US ISM non-manufacturing PMI came out at 55.9, from 56.6 previously, signaling a bit of slowdown in activity due to covid19 resurgence. Market participants are looking forward to the US jobs data to be released today. The EURUSD continued its march higher to $1.2174, and the GBPUSD hovered around $1.3450 after posting a new 2020 high of $1.35 on Brexit deal hopes.

Equities

Futures tied to US stock benchmarks hovered near their record highs on stimulus optimism. The Democrats and Republicans could be reaching a compromise on a small fiscal stimulus bill which could lift the impact of covid19 resurgence until Biden is in charge. The Democrats are offering a $908 billion package while the Senate Majority leader Mitch McConnell is forcing for a much lower amount, somewhere near $500 billion. The S&P500 futures rallied to a record high of 3681, the tech-heavy Nasdaq rose to 12538, while the Dow Jones Industrial Average futures inched higher to 30090, failing to log a new record high.

Metals

Precious metals price continued to push higher as the dollar weakened on prospects of fiscal stimulus. The price of a gold ounce advanced to $1844, the price of a silver ounce hovered near $24.30, while palladium futures recovered to $2343 after a sharp decline.

Major Economic Events

GMT Country Event Expectation Previous

9:30

UK

Construction PMI (Nov)

52.0

53.1

13:30

US

 Average Hourly Earnings (MoM) (Nov)

0.1%

0.1%

13:30

US

 Nonfarm Payrolls (Nov)

500

638

13:30

US

 Unemployment Rate (Nov)

6.8%

6.9%

13:30

CA

 Employment Change (Nov)

20.0

83.6

13:30

CA

Unemployment Rate (Nov)

8.9%

8.9%

 

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