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SPX500 Hits New Record Highs

Nov 4 2019, 07:43 PM (+06) |

Mixed Employment Reports For USD

The US dollar has kicked off the new week on a firmer footing. USD index rallied to 97.11 last from earlier lows of 96.99. Friday’s jobs report was mixed, but broadly positive. The headline NFP figure came in at 128k vs 90k expected.

Despite the beat in the NFP, the unemployment rate was higher last month at 3.6% from 3.5% prior, while average hourly earnings were also a little soft at 0.2% on the month, versus an expected 0.3%. This week, key focus will be on the ISM Non-Manufacturing reading due tomorrow.

EUR Lower on USD Strength

EURUSD has been a little lower over the morning so far on Monday, largely as a result of the stronger US dollar. Today, markets will be focusing on Christina Lagarde who makes her first speech as the new president of the ECB. Traders will be keen to see if Lagarde gives any insight into her views on the economy and ECB monetary policy. EURUSD trades 1.1159 last.

GBP Traders Waiting on BOE

GBUSD has had a muted start to the week, trading slightly in the red as of writing. Incoming headlines around the UK elections campaign will remain the key driver in the short term for GBP.

However, the main focus this week is the BOE meeting on Thursday with traders noting a growing risk that the BOE could cut rates given the further extension to Brexit which is prolonging uncertainty. GBPUSD trades 1.2920 last.

Risk Rallies on Monday

Risk assets have started the week with a bang as the SPX500 continues to trade to fresh all-time highs. Against a backdrop of a further rate cut from the Fed and increased optimism over a US-China trade deal, US equities remain well supported with SPX500 trading 3076.68 last. The UK100 & GER30 are higher at the start of the week also following the avoidance of a no-deal Brexit.

JPY & Gold Lower

Safe havens have been lower over the session so far on Monday. Unsurprisingly, given the gains in risk assets and a more risk-positive environment, JPY and gold are both lower against the dollar. USDJPY trades 108.37 last with price having fallen back below the 108.84 level. XAUUSD trades 1510.21 last, stalling just shy of the key 1522.75 level.

Crude Remains Resilient

Oil prices have started the week in the red, given the stronger US dollar seen over the morning so far. Last week, the EIA reported a huge 5.7 million barrel increase in US crude stores, far higher than analyst projections. However, crude was able to reverse the initial downside to trade higher on the back of the Fed rate cut which, along with better optimism over a US-China trade deal, is keeping the outlook positive for crude in the near term. Crude trades 56.26 last, back above the 55 level this week.

CAD Clinging On

USDCAD has been a little lower today, capped b the 1.3145 level for now. Last week, the BOC kept rates on hold though signaled that further cuts will likely be necessary given weaker global conditions. However, if crude prices start to recover over the coming months on a US-China trade deal this could help alleviate some of the pressure on the BOC.

AUD on The Up

AUDUSD is at an important technical point, testing the bearish trend line from mid-2018 highs along with the .6926 structural level, which is holding for now. Expectations that the US and China will sign a trade deal is keeping AUD supported here as risk assets rally, suggesting the likelihood that we break above the .6926 level soon. However, the RBA meets this week and has the potential to send AUD lower is it strikes a dovish tone. While the bank is not expected to ease again at this point, it could well signal the likelihood of further easing, as we saw with the BOC.

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