The FP Markets Research Team produces First Light News during the early hours of the European session, a daily Market Briefing that helps ensure traders and investors are up to date in the macro space for the day ahead.

Good morning.

Yesterday, we witnessed further evidence of a softening labour market in the US; ADP non-farm employment change showed that 103,000 new payrolls were added to the US economy in November. This was below the market’s median estimate of 130,000 and a touch south of the downwardly revised 106,000 reading in October.

Also in the spotlight yesterday was the Bank of Canada (BoC), which maintained the Overnight Target Rate at 5.0% for a third straight meeting and removed language from its post-rate statement regarding increasing inflationary risks.

The impact derived from both releases was minimal across the financial markets.

Looking Ahead

It’s set to be a relatively quiet day regarding economic events, with the spotlight largely directed towards US unemployment filings for the week ending 2 December. Bloomberg’s median estimate heading into the event is 220,000 new claims, up from 218,000 (the estimate range is between 230,000 and 214,000). This labour release follows Tuesday’s softer-than-expected JOLTs number—which revealed job openings dropped by more than 600,000 to 8.7 million in October, down from 9.3 million in September—and, of course, yesterday’s downside surprise in ADP non-farm employment to just north of 100,000.

Source: Bloomberg

Markets

In the FX space, the Dollar Index pencilled in a third straight advance on Wednesday, not only further cementing its position north of the 200-day simple moving average (SMA) at 103.57 but also drawing the unit to resistance on the daily timeframe at 104.15. Any meaningful break of current resistance will help unearth a bullish scenario towards another daily resistance level coming in at 105.04, which shares chart space with the neighbouring 50-day simple moving average at 105.28. Overall, it was a relatively quiet session across G10 FX; notable observations are Europe’s shared currency dropped for a sixth consecutive session against its US counterpart (EUR/USD was down -0.3%) and was one of the major underperformers on the day. Of note, the Japanese yen (JPY) is strongly outperforming this morning (USD/JPY is down -1.1%).

Major US equity indices fell across the board yesterday, with tech leading. The Dow Jones Industrial Average fell 70 points (-0.2%) to 36,054, the S&P 500 dropped 17 points (-0.4%) to 4,549, and the Nasdaq 100 was down 89 points (-0.6%) to 15,788. Energy stocks underperformed, down -1.6%, followed by tech stocks (-0.9%) and financials (-0.5%); outperformers were utilities, up +1.4% and industrials (+0.5%).

For commodities, spot gold (XAU/USD) was relatively quiet on Wednesday, following the all-time high printed on Monday at $2,148 (and daily bearish outside reversal candle formation). The weekly timeframe of spot silver (XAG/USD) is poised to form a bearish outside reversal candle formation from resistance at $25.87, a move which could guide the precious metal back to support at $22.42. WTI oil took a beating in recent movement, down nearly -4.0% and clocking near 6-month lows. The downward move was exacerbated by dollar strength and EIA stats revealing a stronger-than-expected build in gasoline inventories in the US.

The major crypto BTC/USD has taken a breather in recent trading after touching a high of $45,000 and shaking hands with resistance on the daily timeframe at $43,828 on Tuesday, as well as price connecting with resistance between $46,112 and $42,971 on the weekly timeframe, an area bolstered by a robust overbought signal out of the Relative Strength Index (RSI).

Weekly/Daily Chart of BTC/USD:

(Trading View)

G10 FX space as of 08:20 am GMT:

(Trading View)

Thanks for reading. Have a great day.

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