Weekly data: ‘buying the dip’ ahead of the NFP

This article was submitted by Michael Stark, market analyst at Exness.

Various Asian and European shares plus oil have recovered so far this week after Friday’s dramatic losses as it seems many participants have dialled back on the strong reaction to initial news of omicron, the latest important variant of covid-19. This preview of weekly data looks at UKOIL and AUDUSD ahead of the NFP and OPEC’s meeting in the second half of the week.

The major event in monetary policy last week was the Reserve Bank of New Zealand’s hike of its cash rate to 0.75%. This decision was fairly widely expected and didn’t do much to halt the Kiwi dollar’s losses against most major currencies.

This week’s most important regular release of data is Friday’s NFP, which is currently expected to be around 550,000. Focus is also on Australia with both annual GDP and balance of trade for October due on Wednesday and Thursday respectively.

German annual inflation for November also shot up to a 30-year high of 5.2% as announced on Monday morning. So far this week, there’s no indication that inflation concerns might return to centre stage, but this is a factor to be monitored carefully. In general, this is a fairly active week on the economic calendar, but one should also follow ongoing updates about omicron and its expected effects on major economies’ recovery.

Brent, daily

Based on the gap up over the weekend, Friday’s reaction by oil to the news of omicron’s spread seems to have been excessive. Both major benchmarks for crude oil have now recovered nearly half of Friday’s large down candle and might be on track to continue bouncing. OPEC’s meeting, which is expected to take place on Wednesday and Thursday, is the key news this week.

Even before large losses at the end of last week, it already seemed fairly unlikely that the cartel would significantly boost production. With most members seemingly content with prices of Brent around $75-85 and various countries including Japan having released their strategic reserves of crude, there had been no clear calls among OPEC for increasing production. OPEC’s apparent caution in this situation is understandable given the desire of its members to avoid another crash in the price of oil as their economies continue to recover from the effects of covid-19 and lockdowns.

The very obvious support here is the latest low just below $65 which coincides with the 100% weekly Fibonacci retracement area, i.e. full retracement of all losses in the first half of 2020. As it stands, a breakout below this area is extremely unlikely. Before this strong zone, price has also failed as yet to move below the 200 SMA. Unless there’s a significant shift in sentiment, Brent is likely to remain within the value area between the 100 and 200 SMAs ahead of OPEC’s meeting.

Key data this week

Bold indicates the most important release for this symbol; bold red indicates a release of critical importance to most markets.

Wednesday 1 December

  • 45 GMT: Caixin manufacturing PMI (November) – consensus 50.5, previous 50.6
  • all day GMT (expected): meeting of the Organisation of the Petroleum Exporting Countries
  • 30 GMT: EIA crude oil stock change (26 November) – previous 1.02 million

Thursday 2 December

  • all day GMT (expected): meeting of the Organisation of the Petroleum Exporting Countries

Friday 3 December

30 GMT: non-farm payrolls (November) – consensus 550,000, previous 531,000

  • 00 GMT: Baker Hughes’ oil rig count (3 December) – previous 467

Australian dollar-US dollar, daily


Focus on the outlook for tightening American monetary policy and extremely large losses by iron ore over the summer have driven the Aussie dollar down against the greenback in November. The bounce in October came as Australian bonds temporarily showed strongly growing yields. Sentiment now seems to be generally ‘risk off’, favouring the US dollar, since trade-sensitive currencies are likely to weaken if borders are shut in response to omicron. The Reserve Bank of Australia still expects its rate to start moving up in 2024.

Friday’s 71 cents was an annual low for AUDUSD, so in the case of a forex pair we probably shouldn’t expect further strong losses from here, especially considering the lively bounce from a similar area around the middle of August. The Aussie dollar has been clearly oversold for most of November and there is also evidence of buying volume picking up since the end of last week. 72c is the first important psychological area, while the technical reference to the upside is the 100 SMA around 73.3c. However, direction and momentum this week depend heavily on Wednesday-Friday’s important data.

Key data this week

Bold indicates the most important releases for this symbol;

Wednesday 1 December

  • 30 GMT: Australian annual GDP growth (Q3) – consensus 3%, previous 9.6%
  • 30 GMT: Australian quarterly GDP growth (Q3) – consensus negative 2.7%, previous 0.7%
  • 15 GMT: ADP employment change (November) – consensus 520,000, previous 571,000
  • 00 GMT: ISM manufacturing PMI (November) – consensus 61, previous 60.8

Thursday 2 December

  • 30 GMT: Australian balance of trade (October) – consensus A$11 billion, previous A$12.24 billion
  • 30 GMT: Australian retail sales (final, October) – consensus 4.9%, previous 1.3%
  • 00 GMT: Australian Markit service PMI (final, November) – consensus 55, previous 51.8

Friday 3 December

  • 30 GMT: non-farm payrolls (November) – consensus 550,000, previous 531,000
  • 30 GMT: American unemployment rate (November) – consensus 4.5%, previous 4.6%
  • 30 GMT: American annual average hourly earnings (November) – consensus 5%, previous 4.9%
  • 00 GMT: ISM non-manufacturing PMI (November) – consensus 65, previous 66.7

Disclaimer: opinions are personal to the author and do not reflect the opinions of Exness or LeapRate.

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