Forex news for North American trading on December 1, 2016

  • US stocks mixed. Dow up. S&P and Nasdaq lower
  • US auto sales track lower in November
  • Fed's Kaplan: We will wait and see on Trump policies before judging
  • Trump intends to lower corporate tax rate to 15%
  • Danske's 2017 view: 4 themes, 9 trades, 1 wildcard
  • US crude oil futures settle at $51.06 BBL
  • France's Hollande gives up, says he won't run for Presidency
  • S&P 500 falls below August high, watch the close
  • Doublelines Gundlach likes bonds, gold. Does not like the dollar/stocks
  • Forex technical analysis: USDJPY tests March 2016 highs again. 10 year at new high yield for the day
  • Atlanta Fed GDPNow rises to 2.9% vs 2.4% last
  • EUR/USD: To trade into a 1.00-1.10 range next year: 2 reasons - RBS
  • European stock market close: Italy up, everyone else down
  • EURGBP rebounds off channel trend line
  • EURUSD races back above 1.0600
  • Large majority of ECB favors extending QE beyond March - ECB sources
  • Mexican central bank president Carsten stepping down
  • EIA Natural gas stocks draw of -50 bcf vs -49 estimate
  • Fed's Kaplan: We must take into account global FX, monetary policies
  • France FM Sapin: Calls for fiscal stimulus in Eurozone
  • US construction spending Oct mm +0.5% vs +0.6% exp
  • US ISM manufacturing for November 53.2 vs. 52.5 estimate
  • US Markit manufacturing PMI final comes in at 54.1 vs 53.9 est
  • Canada November mftg PMI 51.5 vs 51.1 prev
  • US Fed's Kaplan says OPEC agreement will help oil prices firm
  • US 10 year yield hits 16 1/2 month high at 2.432%
  • UK's Hammond say earlier comment re EU contributions post-Brexit show flexible approach
  • Initial jobless claims 268K vs 253K expected
  • The strongest and weakest currencies as NA traders enter for the day

In other markets:

  • S&P index -0.35%, NASDAQ composite index -1.36%, Dow industrial average +0.36%
  • US 2 year note 1.143%, +3 basis points. 5- year note 1.8933%, +5.1 basis points. 10 year note 2.4408, +5.9 basis points
  • WTI crude oil futures $50.92,, plus $1.49, +3%
  • Spot gold $1172 $-1.2 or -0.1%

The story in the financial markets were similar in trading today.

  • Gold fell
  • Oil rose
  • Bond yields were higher
  • US stocks saw tech get hit and a rotation into oil and other industrials

The US dollar has been rising with that scenario, but today, it was more of a corrective day lower. The selling started to intensify about the time DoubleLines Jeffery Gundlach said he liked bonds and gold and did not like the dollar and stocks. The 10 year bond moved from just short of 2.50% to 2.44%. Gold which was down $7.00 rallied to down about $1.20. Stocks remained down. The dollar got hit a bit as well.

In fundamental news today

  • Car sales looked good at first with GM and Ford, beating but the others did not do as well and the sales came in at 13.85m vs 14.0 estimates
  • ISM Manufacturing equaled the high water mark for the year at 53.2
  • Construction spending came in at 0.5% vs 0.6% estimate
  • Initial claims were a bit weaker than expectation.
  • The Atlanta Fed GDP now estimate moved up to 2.9% vs a 2.4% estimate reported just yesterday.

Tomorrow is employment day in the US with the

  • Change in nonfarm payroll jobs expected to rise by 180K vs 161K last month.
  • manufacturing jobs are expected to decline by -2K vs -9K last month
  • unemployment rate is expected to remain unchanged at 4.9%
  • average hourly earnings are expected to rise by 0.2% versus 0.4%. Year on year the gain is expected to be 2.8% unchanged from the prior month

What does the technical picture look for some of the favorite pairs...

The EURUSD started the NY session on a weak note is the price fell back below the 100 and 200 hour MAs. That trend was reversed and at the close the pair is trading above a downward sloping trend line on the hourly chart that connected a series of highs going back to November 16th. The trend line cuts across at 1.0648. That is a risk level for longs into the new day. The 100 bar MA on the 4-hour chart comes in at 1.0683 and that is the next major hurdle for buyers IF this pair is going higher. That MA has not been breached since November 9th.

The USDJPY moved above the 114.44-54 highs from March 2016 on three separate occasions, and on each peak above, the price was back below that area by the next hourly bar. The high price for the day stalled just below the mid-Feb high at 114.86 (the high reached 114.82). The corrective low in the NY afternoon session stalled at 113.91 - 10 pips above the day's lows. Although the pair moved to new highs, it was a challenge to move higher. With the US employment to be released in the new trading day and the pair up over 1300 pips from the election day low less than a month ago, losing some of the upside momentum can be expected. Close support at 113.81-91. Resistance at 114.44-54. Lean against your favorite, but understand, the landscape may change at 8:30 AM tomorrow when the NFP is released. PS The report is not likely to change the Fed's mind but it could influence trading on the relative strength or weakness.

The GBP was the strongest currency coming into the NY session but a lot of the gains were eroded as the day went on. The catalyst? Technicallly, the price of the GBPUSD traded above the November 11th high at 1.2673, but that break could not be maintained, and the pair started a corrective move back down. Although the pair remained higher on the day (by 0.69%), it was over 100 pips lower from the high at the close. The EURGBP which nearly reversed the entire 118 move lower was also a catalyst that helped keep the EURUSD bid in the NY afternoon and the GBPUSD offered and moving lower.

The USDCAD seemed to finally start to pay attention to the soaring crude oil prices. Typically the CAD gets stronger /the USDCAD weaker when oil rebounds. Yesterday oil went higher by over 8% and the price of the USDCAD was near unchanged. Today, oil was up by another 4% and - although the USDCAD was trading down - it was not by much. However, the pair started to move lower in the NY afternoon session and that move saw the pair extend below a lower trend line at the 1.3330 level (on the daily chart) and test the 50% retracement of the move up from the October 19th low at 1.32964 (the low reached 1.3300). IN the new trading day, a move below the 1.3300 level could see further corrective move lower. Tomorrow Canada will release their employment statistics as well with the expectations for the net change in employment coming in at -15K.

Below is a snapshot of the percentage changes of the major currencies versus each other. The CAD is the strongest, while the USD is the weakest.