Events to look out for next week

Markets remain weighed by the uncertainty of the impact from the Omicron variant and this is likely to drag into next week as clear data will not be available until mid–December. Chair Powell continued the FED’s shift to the Hawkish side as “transitory” inflation was finally “retried”, a faster taper was suggested and therefore an earlier start to the interest rate hike cycle.  A strong set of US data this week was topped by the unemployment rate diving to 4.2% even though the headline NFP was only 210,000, when expectations had been for 550,000 new jobs. Next week the December central bank merry go-round comes into focus starting with the RBA & BOC, along with Chinese Trade data, EZ & Japanese GDP numbers.

Monday – 06 December 2021

---

• German Factory Orders (EUR, GMT 07:00) – German factory orders have been extremely volatile recently;  +3.4% September, -7.7% (revised lower to -8.8%) October and +1.3% rebound in November. As new restrictions loom for the unvaccinated, Germany economy factory orders are likely to have rebounded again and turned negative.

Tuesday – 07 December 2021

---

• RBA Rate Statement & Interest Rate Decision (AUD, GMT 03:30) – The Bank’s forecast remains “for inflation to pick-up gradually as the economy strengthens” and an an eventual rate hike (RBA is cautiously optimistic on growth, inflation). However, markets see them on hold through mid-year, with no change possible for the full year depending on the growth and inflation data and the path of Omicron.
• ZEW Economic Sentiment & EZ Employment & Revised GDP  (EUR, GMT 10:00) – Key set of dat for EZ – The ZEW is likely to show a gradual rebaound from the October low at 21.0 and November reading at 25.9, however well below the early summer highs of 84.0 in May.  The Quarterly Employment is likely to remain steady at 0.9% from September’s 0.7% and the decline of -0.3% in June. Finally the revised GDP could rise to 2.2% from 2.0% with the YoY number rising to 13.6% from 3.7% in 2020.

Wednesday – 08 December 2021

---

• BOC Rate Statement & Press Conference – (CAD, GMT 15:00 & 15:30) –  Last time the BOC ended quantitative easing and is moving to the reinvestment phase, “during which it will purchase Government of Canada bonds solely to replace maturing bonds.” in a move to address rising inflation. The bank held the overnight rate at 0.25% and maintained its “extraordinary forward guidance” for the path of the overnight rate. No change is expected today.
• JOLTS Job Openings (USD, GMT 15:00) – This Janet Yellen invention continues to receive more prominence as the US job market continues to show signs of significant  tightening. Many workers not returning to jobs, retiring early on the back of buoyant stock markets and record house prices and many not returning even after the Govement cheques stopped and the schools re-opened. A heft 10.93 million reading in September has only declined to and expected 10.45 million today.

Thursday – 09 December 2021

---

• Consumer Price Inflation (CNY, GMT 01:30)– China has not be immune to rising prices and uncertainty. With the continuing clouds over many real estate developers (Evergrande & Kaisa the two highest profile) and the tech crack down by the authorities also continuing (Didi announcing it will delist from the NYSE and move to the Hang Seng) Inflation is set to tick higher; CPI up to 1.6% from 1.5% and PPI 14.0% from 13.5%.
• Weekly Claims (USD, GMT 13:30) Following last weeks 52-year low reading at only 222k and the previous week being revised lower again to 194K this weeks number is eagerly awaited. Seasonality factors apart, the evidence of the tight US jobs market continues, a more normal economic cycle average is 250-260K.  

Friday – 10 December 2021

---

• German Final CPI (EUR, GMT 07:00) – Expectations are for HICP to remain steady YoY at 6%. with the month on moth number turning up to 0.0% from -0.2% in November.   
• Industrial Production, Manufacturing Production and GDP (GBP, GMT 07:00) A plethora of data from the UK should show a continued stuttering recovery. IP is expected to turn up from -0.4% last time but remain in decline, MP should be more robust at 3.1% (Y/Y) from 2.8% last time and (-0.1% m/m). And m/m GDP is expected to have risen to 0.7% from 0.6% in November.
• US Core CPI (USD, GMT 15:30) – This key data point is expected at 0.7% from 0.6% last month and the headline number 1.1% from 0.9% last time. The FED’s prefer measure of inflation remains the PCE Price Index, but with “transitory” now not part of their mantra the depth and extent of higher prices remains of key interest.

Click here to access our Economic Calendar

Stuart Cowell

Head Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

from HF Analysis /292014/
via IFTTT

Evergrande Says Formulating Restructuring Plan for Offshore Debt

from Forex News https://www.investing.com/news/forex-news/evergrande-says-formulating-restructuring-plan-for-offshore-debt-2698855
via IFTTT

Cryptocurrency roundup: Facebook U-turns on crypto-ad ban

As Facebook makes a U-turn on accepting cryptocurrency ads, Saloni Sardana casts her eye over the stories that have caught our eye in the last seven days.

from Moneyweek RSS Feed https://moneyweek.com/investments/alternative-finance/bitcoin-crypto/604198/cryptocurrency-roundup-facebook-u-turns-on-crypto-ads
via IFTTT

NFP may Cause Short-term Dollar Push

Among all the themes that drove the markets this week, two main ones can be distinguished. The first is uncertainty caused by the new strain, which, by the way, is rapidly unwinding thanks to positive news flow. The second is the Fed's growing concern about inflation and hints that the rate of asset purchases from the market may slow down faster. In the absence of any surprises on the “omicron”, today's NFP data should make the Fed story the main one and will most likely provide short-term support for the dollar.The reshaping of the yield curve this week reflected well the impact of these two themes on the market. Long rates declined in response to the uncertainty surrounding the economic consequences of the spread of Omicron, while short rates, on the contrary, actively resisted due to the strengthening of the Fed's hawkish rhetoric. As a result, the spread between 10 and 2-year Treasury rates (the very “harbinger of a recession”) lost almost 19 bp in 4 days:The narrow-minded interpretation of this spread is that the economy is heading for a recession or the Fed is going to tighten the screws too much.This week, the US Central Bank made it clear that it does not consider inflation to be temporary. Powell said that the word "temporary" is no longer appropriate to describe the current inflation, which came as a big surprise, given that the Fed had said otherwise in the summer. The ECB also acknowledges that inflation is taking root but has stubbornly ruled out a rate hike next year. Earlier, Lagarde said that the ECB will not leave price increases without response, however, a rate hike is unlikely. The Fed is now much more decisive and a solid report on US employment today will increase pressure on the US Central Bank to phase out stimulus faster as the recovery in employment approaches targets.Job growth is expected at 500 thousand. A decrease in unemployment and an increase in the pro-inflationary factor - wages are also expected. A stronger than forecast decline in unemployment (3.8% is considered full employment) or growth in wages (more than 0.4% in monthly terms) could lead to a significant short-term strengthening of the dollar today.Typically, when the US yield curve flattens, the dollar rallies against pro-cyclical currencies, which is no surprise as monetary stimulus starts to slow down and growth prospects deteriorate. Among the G10 currencies this week, the weakest against the dollar were the currencies with a strong pro-cyclical component - AUD, NZD and NOK. In the meantime, testing is planned for AUDUSD and a possible breakdown of the lower border of the bearish channel, which can be a good opportunity to catch a short-term reversal in the pair:It’s procyclical peer NZDUSD is in a similar position:

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/nfp-may-cause-short-term-dollar-push"
via IFTTT

Why the “capital cycle” is so important for investors to understand

Price is important when investing. But there’s something else to consider, says Merryn Somerset Webb – the capital cycle. Here’s what it is and why it’s so important.

from Moneyweek RSS Feed https://moneyweek.com/investments/investment-strategy/604195/why-the-capital-cycle-is-so-important-for-investors-to
via IFTTT

Law Debenture investment trust gets boost from hydrogen

Saloni Sardana looks at recent developments in the Law Debenture investment trust, one of the six funds in MoneyWeek’s model investment trust portfolio.

from Moneyweek RSS Feed https://moneyweek.com/investments/funds/investment-trusts/604197/law-debenture-investment-trust-gets-boost-from-hydrogen
via IFTTT

Market Spotlight: Trading The November NFP

NFP Up NextThe US labour reports for November are due today and will be the main data focus for the week. On the back of the Fed’s tapering announcement in November and with inflation and other indicators pointing higher, a positive reading today has the potential to ignite tapering expectations for December. However, given the uncertainty around the new COVID variant, it would likely take a very strong set of numbers to see USD trading sharply higher. Given that most health authorities warn it will take at least a few weeks to assess the severity of the Omicron, it seems reasonable to think that the Fed will look to refrain from further tightening. That is, of course, unless the data makes it very difficult not to.With the market looking for mid 500k on the NFP, a reading over 600k will be the best news for bulls. The unemployment rate is forecast to tick lower again, down to 4.5%. However, it would be a strong beta on the hourly earnings number that could really be interesting. If earnings are seen sharply higher, this might be the biggest incentive for the Fed to taper further this month and would likely see USD trading higher near term.Where to Trade US Labour Reports?USDCADThe rally in USDCAD has seen price trading up to just shy of the major 1.2885 – 1.2952 resistance zone. This is a huge band of resistance for the pair and a break higher here would open the way for a much fuller bullish reversal targeting 1.3079 initially and 1.3239 as a longer-term level (the ABCD completion level).

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/market-spotlight-trading-the-november-nfp"
via IFTTT

How Much Will Omicron Overshadow Today's NFP Release?

COVID Uncertainty DominatesThe uncertainty around the recently announced Omicron COVID-variant has been well reflected in the price action we’ve seen across asset classes this week. While most leading indices remain broadly in the red for now the initial decline has yet to be advanced and, instead, we are seeing price moving in choppy consolidation mode as traders await further details on the new variant. Interestingly gold prices remain under pressure here suggesting that the asset is not the preferred safe haven of the moment, likely given US tightening expectations.Waiting On Further DetailsThe initial global reaction to Omicron has tempered somewhat in line with advice from scientists to “wait and see” with regard to how serious the new strain proves to be. So far, the only encouraging sign is that the new strain appears to lead to milder symptoms (less hospitalisations and deaths) which might mean that countries are able to avoid going into lockdown again (which was the key fear initially). However, should the new strain prove to be more deadly than it initially seems, this could quickly lead to fresh downside in risk sentiment.US Jobs In FocusAway from COVID, the focus today will be on the US jobs reports for November. The market is broadly expecting an improvement on the prior month. With most indicators having ticked higher recently, reflecting a pickup in activity, expectations are well primed for the release. However, it would likely take a strong beat here to significantly impact the Dollar higher against the COVID backdrop. If we do see USD trade higher today, however, this is likely to weigh on gold prices further in the near term.NFP Expected To ImproveIn terms of numbers then, the market is looking for the headline NFP to come in at 553k from 531k prior. Additionally, the unemployment rate is forecast to fall back to 4.5% from 4.6% prior while average hourly earnings are set to remain unchanged at 0.4%. Given the Fed’s focus on employment (and with inflation surging), a strong set of numbers today will sharpen the focus on December tightening. Alternatively, any disappointment today will likely add further uncertainty given the resurgence in COVID fears, likely sending USD lower near term.Technical ViewsDXYFor now, the Dollar index is holding in a tight band between the 95.61 and 96.46 levels. While support holds, the focus is on a continuation higher in the near term, resuming the bull move we saw over November. A break below that level, however, will turn the focus to 94.54 next.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/how-much-will-omicron-overshadow-todays-nfp-release"
via IFTTT

Could the oil price hit $150 a barrel by 2023?

The oil price has fallen as a new strain of Covid brings fresh restrictions around the world. But in the long run it’s a different story, with some analysts predicting $150 a barrel. John Stepek looks at how likely that is.

from Moneyweek RSS Feed https://moneyweek.com/investments/commodities/energy/oil/604196/could-the-oil-price-hit-150-a-barrel-by-2023
via IFTTT

FOMO Friday: AUDJPY On The Rocks

COVID Fears ReturnAnother week winds down, bringing us just that bit closer to the end of the year. It’s been a week of uncertainty for most, given the return of COVID fears created by the Omicron variant. In markets, it’s been something of a tricky week as traders await further details on the new strain. This has created mostly choppy conditions, especially with the NFP sitting at the top of the week also. However, as always, there have been moves and there have been winners and losers. Talking with traders this week about the market action we’ve seen it seems the main focus has been on the more than 2% drop we’ve seen in AUDJPY. So, let’s take a look at what caused the move and, as ever, if you caught it? Well-done, if not? There’s always next week!What Caused the Move?The almost 200 pip drop in AUDJPY this week was a very clear cut move in response to the current news-flow we are seeing around the new COVID variant. Given AUD’s status as a risk currency (tied to commodity prices and global trade) and JPY’s safe-haven status (used as a store of value during times of uncertainty), AUDJPY was all but guaranteed to sell-off this week. In fact, the pair is often a great barometer for overall risk sentiment in the market as a result of the divergence between the two currencies.AUD Lower On Risk AversionSo, with risk assets under pressure this week over fresh COVID fears, AUD was seen trading lower. Fears that the virus will lead to a fresh global wave and, most importantly, potentially require a return to nation-wide lockdowns, has been a big blow to risk sentiment. Although the initial knee-jerk sell-off in risk assets has mostly abated for now, there is still the risk that should scientists confirm that the variant is more deadly than previous strains, selling will pick up pace again. While this uncertainty remains, AUD is likely to remain under pressure near term.JPY Safe Haven DemandSimilarly, this same uncertainty which is weighing on risk assets is instead driving demand into JPY as a result of safe-haven inflows. Given that the Fed recently began tapering and is expected to continue tightening, it seems that JPY is a preferred safe haven destination, over gold, currently, which is adding extra support. Again, unless there is a big shift in narrative around the new COVID variant, this dynamic is likely to continue, keeping AUDJPY under pressure near term.Technical ViewsAUDJPYThe sell-off in AUDJPY has seen the market breaking down below the 80.69 level this week. With both MACD and RSI firmly bearish, and with the retail community holding an almost 70% long position, there is plenty of room for the current sell off to continue towards 79.57 and 78.44 beyond.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/fomo-friday-audjpy-on-the-rocks"
via IFTTT

Investment Bank Outlook 03-12-2021

Credit AgricoleAsia overnightRecorded cases of omicron are showing a greater geographical dispersion with cases now being recorded in Malaysia and New York. Hawkish Fed speak continues with several members justifying the need for a faster tapering of asset purchases. China’s technology stocks fared poorly as both China and US officials are pressuring companies to delist from exchanges in the US. Asian bourses held up, however, and most were trading modestly higher at the time of writing. S&P 500 futures were trading flat. The USD was modestly stronger in the Asian session on the back of hawkish Fed speak. The Antipodean currencies were the worst performers in the G10 in the Asian session and the CAD the strongest performer.CitiEuropean OpenAdditional cases of Omicron were detected in the US, as reported by Reuters. On the back of that, we saw a slightly risk off tone during the start of Asian trading. However, initial knee-jerk reactions unwound as the session progressed, underscoring a lack of conviction and the presence of some jitters. NZD and AUD ticked lower, although they pared some of the losses later in the session. A similar theme in equities, where we saw S&P e-minis paring losses from -0.7% down to trade +0.1% . Oil ticked higher, although at a moderate pace in comparison to the volatility of late. THB reversed some losses to trade in the green, on-track to end its ten day losing streak.Markets were quiet ahead of NFP at 13:30 GMT. We will also sight Fedspeak ahead of the blackout period from Bullard at 14:15 GMT, prior to ISM Services Index at 15:00 GMT. CAD will see a set of job data at 13:30 GMT, with net change in employment being the most significant for markets. Over in the EM space, we will see TRY CPI (07:00 GMT) and BRL IP data (12:00 GMT).USD was flat in the Asian session, with UST also trading flat at the time of writing. Against the G10, USD was slightly stronger on the day.–Our UST trader Hideyuki Liu observes that treasuries rallied on the Omicron news led by intermediates, but flows were surprisingly one of better selling across the curve - from 2y to 30y by a variety of accounts. Perhaps finally wising up to all the Omicron news, treasuries ended up paring much of its gains as we head into the London open, with the front-end leading the weakness.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/investment-bank-outlook-03-12-2021"
via IFTTT

Ewan Markson Brown: the joy of small companies

Merryn talks to Ewan Markson-Brown of Crux Asset Management about why when it comes to emerging markets, he much prefers to invest in micro- and small-cap companies than the likes of Tencent and Alibaba

from Moneyweek RSS Feed https://moneyweek.com/investments/investment-strategy/604194/ewan-markson-brown-the-joy-of-small-companies
via IFTTT

Forget socialism – shareholder capitalism is delivering

Most "Millennials" think they would prefer to live in a socialist society. That's understandable. But while socialism promises everyone ownership and power, it has never actually delivered. Shareholder capitalism, on the other hand, does deliver.

from Moneyweek RSS Feed https://moneyweek.com/economy/604192/forget-socialism-shareholder-capitalism-is-delivering
via IFTTT

Power your portfolio with renewable-energy stocks

The COP26 conference showed that fossil fuels are on their way out. This is a big opportunity for companies developing the equipment and technology that will make green energy viable, says Matthew Partridge

from Moneyweek RSS Feed https://moneyweek.com/investments/commodities/energy/renewables/604191/power-your-portfolio-with-renewable-energy-stocks
via IFTTT