Markets are mixed in range as traders await today's Non-Farm Payrolls report from US. Dollar bears hesitated to sell the greenback through recent low against Euro this week so far in spite of all the happenings, including fading of Dubai risk and gold's rally run. On the dollar hand, while dollar tried to rebound as gold tested 1200 level earlier, it's so far lacking follow through buying. Markets are stuck in a directionless mode for the moment and will look to the employment report from US for inspirations. In addition, Canadian job report will also be closely watched too.
US employment should have improved in November after unexpectedly poor readings in October. Non-farm payrolls probably dropped -114K in November following a -190K decline a month ago. Unemployment rate should have stayed at 10.2%. Economic data released these days generally pointed to stabilization in unemployment situation. Initial jobless claims slid -5k to 457k in the week ending November 28. This also lowered the 4-week moving average by -14k to 481k, the lowest reading November 2008. Although continuing claims to 5465k for the week ending November 21, the reading had plunged over the past 10 weeks. ISM manufacturing declined from its recent peak of 55.7 in October to 53.6 in November but employment component stayed above 50 for the second consecutive week while new orders component rose to 60.3 from 58.5 in October. The major concern came from the services sector. Released Thursday, ISM non-manufacturing index slipped back into contraction territory and the employment component, at 41.6, remained poor. Seasonal factor should have lifted the number of payrolls modestly. The seasonal adjustment process is concurrent and is expected to lead to sizeable upward revisions to the payroll readings (around 50K to 70K) for September and October.
Looking at the dollar index, with 4 hours MACD crossed above signal line, some stabilization is seen ahead of 74.19 support and intraday bias is turned neutral for the moment. However, note that risk is still on the downside with 75.08 minor resistance intact and a new low below 74.19 is likely. Though, a break of 75.08 will argue that choppy fall from 75.58 has completed and we might see a test on trend line resistance at 75.77 in this case.
USD/CAD Daily Outlook
Daily Pivots: (S1) 1.0494; (P) 1.0538; (R1) 1.0616; More.
USD/CAD's rebound from 1.0405 extends further to as high as 1.0583 so far and at this point, intraday bias is mildly on the upside as long as 1.0462 minor support holds. Break of 1.0610 resistance will suggest that fall from 1.0748 has completed and will also argue that consolidation pattern fro 1.0851 has finished too. Stronger rally should then be seen 1.0748 first. On the downside, Though, below 1.0462 minor support will flip intraday bias back to the downside and indicate that correction from 1.0851 is still in progress for 100% projection of 1.0851 to 1.0416 from 1.0748 at 1.0313. But downside should be contained above 1.0205 low to conclude the correction.
In the bigger picture, a medium term bottom might be in place at 1.0205 with bullish convergence conditions in daily MACD. As noted before, fall from 1.3063 is viewed as a correction to long term rise from 0.9056. Such correction might have already completed with three waves down to 1.0205 already (1.0784, 1.1732, 1.0205). Break of 1.1101 resistance will confirm this case and target 61.8% retracement of 1.3063 to 1.0205 at 1.1971 at least. On the downside, break of 1.0205 will invalidate this view and bring down trend resumption to parity instead.
Economic Indicators Update
|08:15||CHF||CPI M/M Nov||0.00%||0.60%|
|08:15||CHF||CPI Y/Y Nov||-0.10%||-0.80%|
|12:00||CAD||Net Change in Employment Nov||15.3K||-43.2K|
|12:00||CAD||Unemployment Rate Nov||8.60%||8.60%|
|13:30||USD||Change in Non-farm Payrolls Nov||-114K||-190K|
|13:30||USD||Unemployment Rate Nov||10.20%||10.20%|
|15:00||CAD||Ivey PMI Nov||60.4||61.2|
|15:00||USD||Factory Orders Oct||0.10%||0.90%|