The markets continue to whipsaw ahead of today’s payrolls report. This comes after the private payrolls, as reported by ADP hit a six month low. Private firms added just 67k jobs in November, falling well below estimates. The dollar remains weak, posting declines for five consecutive days. Equity markets were recovering from Tuesday’s sell-off, but sentiment is cautious.
Eurozone Final Services PMI Improves
The final services PMI report for the Eurozone came out better than expected. Services activity, as measured by IHS Markit, saw the index rising to 51.9 for November. This was higher than estimates of 51.5 and a modest increase from October’s 51.5. The increase in the index was driven by higher services activity from Germany and Spain.
EURUSD Rebounds off Support – Will the Momentum Keep Up?
The euro currency fell to the support area of 1.1062 – 1.1075 and promptly recovered. With support established at this level that previously served as resistance, further gains are possible. The next upside target for the EURUSD is at 1.1131. But we do not expect the euro to break past this level for the moment.
Sterling Maintains Gains on Prospects of Johnson Re-election
The pound sterling continued to maintain gains rising to new seven month highs on Thursday. The gains come as traders are pricing in a Tory victory. The UK heads to the polls of December 12th. Re-Election of the incumbent PM Boris Johnson is likely to pave way for an orderly Brexit in January next year.
GBPUSD Could Correct Lower
Although the currency pair has been posting strong gains, there is scope for a pullback. This will lead to a short term correction. For the moment, the psychological price level of 1.3100 remains key. If this level fails to hold as support, we anticipate the declines to push the GBPUSD down to 1.2960 which is pending a retest.
Gold Regains Momentum Amid Weak US Data
The precious metal pared losses from Wednesday as investors turn cautious ahead of key economic events. The trade war narrative remains the major catalyst, however. The US is set to raise tariffs on China come December 15th. Therefore, with the markets uncertain about the deal, gold prices are recovering.
XAUUSD on Track to Hit Resistance
The precious metal is seen rising towards the resistance area of 1483. Although this level was previously tested, prices were promptly rejected. We expect to see a firmer test of this resistance area. In the event that XAUUSD breaks out above 1483, then further gains could be seen towards the 1490 region.