Morning Market Review for 02.12.2024

EUR/USD

The EUR/USD pair is showing a confident decline, correcting after the predominantly "bullish" trading at the end of last week. Quotes are testing 1.0531 for a breakdown, while investors await the publication of November statistics on business activity in the US and the eurozone. S&P Global's Manufacturing PMIs in Germany and the eurozone are expected to remain unchanged at 43.2 points and 45.2 points, respectively, and in the US — at 48.8 points. At the same time, the Institute for Supply Management (ISM) PMI is likely to increase from 46.5 points to 47.5 points. At 12:00 (GMT+2), the market will see October data on the eurozone Unemployment Rate, which currently stands at 6.3%, and a speech by the President of the European Central Bank (ECB) Christine Lagarde, who may clarify the regulator’s plans for further easing of monetary policy in the region. Last Friday, the EU released its November inflation statistics: the Consumer Price Index accelerated from 2.0% to 2.3% year-on-year, in line with market forecasts, and fell 0.3% month-on-month after increasing by 0.3% in the previous month, while the Core CPI adjusted from 2.7% to 2.8% year-on-year and fell by 0.6% after growing by 0.2% month-on-month. The November US labor market report is due out later this week, with nonfarm payrolls expected to rise by 183.0 thousand after increasing by 12.0 thousand last month, with Average Hourly Earnings falling slightly from 0.4% to 0.3% and the Unemployment Rate remaining at 4.1%.

GBP/USD

The GBP/USD pair is trading with a downtrend, retreating from local highs from November 13, updated at the end of last week. The instrument is testing 1.2690 for a breakdown, and traders are awaiting the publication of November data from S&P Global on business activity in the UK and the US. The UK Manufacturing PMI is expected to remain at 48.6 points, while the US one is expected to remain at 48.8 points. In addition, today, at 09:00 (GMT+2), in the UK, the November statistics on the Nationwide Housing Price Index hit the market: the indicator in monthly terms accelerated from 0.1% to 1.2% with expectations of 0.2%, and in annual terms (without seasonal adjustment) — from 2.4% to 3.7% with neutral forecasts. It is worth noting that last Friday, some pressure on the position of the British currency was exerted by the minutes of the Bank of England meeting, as well as the financial stability report. As expected, the regulator came out with rather cautious wording, pointing out the risks to the global economy in connection with the deterioration of trade prospects, hinting at the readiness of the newly elected US President Donald Trump to raise import duties. At the same time, officials pointed to the stable state of the British financial sector, which is ready for new challenges. Investors also took note of consumer lending data, with Net Lending to Individuals rising to 4.5 billion pounds in October from 3.8 billion pounds, compared with analysts' expectations of 4.1 billion pounds, and Mortgage Approvals rising to 68.303 thousand from 66.115 thousand, compared with market expectations of 64.5 thousand.

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Publication date:

02 December 2024 - 11:58 (GMT)

The AUD/USD pair shows moderate decline, testing the level of 0.6500 for a breakdown. Some pressure on the instrument is exerted by macroeconomic statistics from Australia. In particular, analysts drew attention to the November inflation data from TD Securities: the annualized figure was adjusted from 3.0% to 2.9%, and the monthly figure — from 0.3% to 0.2%. A further slowdown in inflation could signal further monetary easing by the Reserve Bank of Australia (RBA), which has so far maintained a fairly neutral stance. At the same time, Retail Sales in October added 0.6% after increasing by 0.1% in the previous month, while analysts expected 0.3%, and Building Permits increased by 4.2% in monthly terms after 5.8% with preliminary estimates of 2.1%, and in annual terms it fell from 6.8% to 6.1%. The instrument also received some support from data from China, where the Caixin Manufacturing PMI from S&P Global accelerated in November from 50.3 points to 51.5 points, with expectations of 50.5 points. Australia will release November business activity data on Wednesday, as well as revised figures for third-quarter Gross Domestic Product (GDP), with analysts expecting the figure to rise to 0.5% from 0.2%. The US will release its November labor market report later this week, with Nonfarm Payrolls forecast to rise by 183.0 thousand after 12.0 thousand in the previous month.

The USD/JPY pair is recovering from a sharp decline at the end of last week, when local lows from October 21 were updated. During the Asian session, quotes are testing 150.65 for a breakout, supported by technical factors and in anticipation of key macroeconomic statistics on the US labor market at the end of the week. Nonfarm Payrolls are expected to increase by 183.0 thousand in November after increasing by 12.0 thousand in the previous month, Average Hourly Earnings are expected to adjust to 0.3% from 0.4% on a monthly basis, and the Unemployment Rate is expected to remain unchanged at 4.1%. In turn, Michigan Consumer Sentiment Index is projected to rise in December from 71.8 points to 72.9 points. On Wednesday, at 15:15 (GMT+2), the US will see a report from Automatic Data Processing (ADP) on private sector employment, with forecasts suggesting a slowdown in November from 233.0 thousand to 165.0 thousand, and at 21:00 (GMT+2), the US Federal Reserve’s monthly economic review, the Beige Book, will be released. Meanwhile, the yen is being supported by statements by Bank of Japan Governor Kazuo Ueda that the cost of borrowing may soon be raised from the current 0.25% at a meeting on December 18-19, since macroeconomic statistics are consistent with the regulator's expectations. Japan released Tokyo-area inflation data for November on Friday, with the annual Consumer Price Index (CPI) rising sharply from 1.8% to 2.6%, while the CPI excluding Food and Energy rose from 1.8% to 2.2%. Investors also noted the growth in Retail Sales in October from 0.5% to 1.6%, which, however, turned out to be worse than the expected 2.2%, while Industrial Production in monthly terms increased from 1.6% to 3.0% with preliminary estimates of 3.9%.

The XAU/USD pair is falling, testing 2620.00 for a breakdown. Market activity is fairly strong for a Monday morning session, partly due to US investors returning to the market after Thanksgiving. The dollar is also strengthening amid expectations of new drivers of movement. In particular, November data on Manufacturing PMI will be presented today: forecasts suggest that the S&P Global index will remain at 48.8 points, and the indicator from the Institute for Supply Management (ISM) may rise from 46.5 points to 47.5 points. On Wednesday, the market will receive statistics on Services PMI: it is expected that the index from S&P Global will be fixed at 57.0 points, while the ISM indicator may be adjusted from 56.0 points to 55.5 points. Also, on Wednesday, a report from Automatic Data Processing (ADP) on private sector employment will be published: analysts expect a slowdown in November from 233.0 thousand to 165.0 thousand. The ADP data will come ahead of the Labor Department's final jobs report, which showed a record low of just 12.0 thousand Nonfarm Payrolls in the previous month. In November, a more noticeable increase of 183.0 thousand is expected. Markets also expect Average Hourly Earnings to slow from 0.4% to 0.3%.