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.

Thursday delivered a somewhat subdued calendar, with the only tier-1 data of note being the weekly jobless filings out of the US. For the week ending 2 December, weekly unemployment claims came in as expected at 220,000, while continued claims—or insured unemployment—revealed a 64,000 decline in claims to 1.861 million for the week ending 25 November.

Looking Ahead

Today is all about the government’s US Employment Situation Report. According to Bloomberg’s median estimate, non-farm payrolls are expected to have increased to 183,000 in November, up from 150,000 in October. The estimate range is notably large: between 275,000 and 45,000, with the average estimate coming in a touch north of 180,000.

Source: Bloomberg

The US unemployment rate is expected to remain unchanged at 3.9%, though the estimate range falls between 4.0% and 3.8%. In terms of wages, from October to November, wages are expected to tick higher to 0.3%, up from 0.2%, while the year-on-year wages measure for November is anticipated to slow to 4.0% from 4.1%.

You will recall that Tuesday saw the JOLTs job openings slow, as well as a downside surprise in Wednesday’s ADP print along with business surveys noting a slowdown in hires, all of which points to a softening/loosening job market. Should the headline NFP surprise to the upside today and wages deliver an elevated print (particularly year on year), this could lift the US Dollar Index and US yields and potentially weigh on equities and vice versa for soft NFP and wages data.

Markets

FX observed dollar losses against most G10 peers yesterday; against a basket of six international currencies, including the euro (EUR), the US Dollar Index finished the day -0.5% lower. The Japanese yen (JPY) was the currency in the spotlight on Thursday, however, outperforming on speculation that the Bank of Japan (BoJ) could potentially end its negative interest rate policy. The USD/JPY slid -2.2% on the day, reaching multi-month lows of ¥141.60.

Underpinned by communication stocks (+3.2%), particularly Alphabet (GOOGL), which jumped +5.3% on the back of the tech giant’s newly launched artificial intelligence (AI) model ‘Gemini’, equities were largely bid yesterday. The Dow Jones Industrial Average rose 62 points (+0.2%) to 36,117, the S&P 500 climbed 36 points (+0.8%) to 4,585, and the Nasdaq 100 jumped 234 points (+1.5%) to 16,022.

In the commodities space, spot gold (XAU/USD) remained quiet in recent trading, following the all-time high printed on Monday at $2,148 (and daily bearish outside reversal candle formation). For WTI oil prices, the unit eked out marginal gains on Thursday, snapping a five-day losing streak; current price, however, has extended recovery gains, up +1.5% as of writing.

The major crypto BTC/USD continues to show signs of overbought after touching a high of $45,000. You may recall from yesterday’s note that the price has connected with resistance on the daily timeframe at $43,828, as well as 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).

G10 FX space as of 08:55 am GMT:

(Trading View)

Thanks for reading. Have a great day.

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