Macro Roundup (Nov 26)

SHANGHAI, Nov 26 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The dollar rebounded from a three-month low against a basket of currencies on Wednesday as a risk-on rally in global financial markets appeared to stall after U.S. data showed a less-than-rosy economic picture.

The number of Americans filing first-time claims for jobless benefits increased further last week, suggesting that an explosion in new COVID-19 infections and business restrictions were boosting layoffs and undermining the labor market recovery.

The U.S. dollar index was 0.05% lower at 92.086, having fallen as low as 91.941 earlier in the session, its weakest since Sept 1. Against the yen, the dollar was 0.07% lower.

With the U.S. Thanksgiving break around the corner, it would not be surprising to see risk assets correct and the U.S. dollar rebound modestly, Shaun Osborne, chief currency strategist at Scotiabank, said in a note, “as positions are squared up ahead of what is effectively a long weekend”.

On Wall Street, the Dow Jones Industrial Average fell on Wednesday, taking a breather after reaching a significant milestone, while traders pored over disappointing unemployment data.

The 30-stock Dow slid about 173.77 points, or 0.6%, to 29,872.47. The S&P 500 dipped 0.2%, or 5.76 points, to 3,629.65 after reaching an all-time closing high in the previous session. The Nasdaq Composite outperformed, rising 0.5%, or 57.62 points, to 12,094.40.

Trading volumes were lighter than usual ahead of the Thanksgiving holiday. The SPDR S&P 500 ETF Trust (SPY) traded more than 33 million shares, less than half its 30-day average volume of 79.3 million.

The Labor Department said that 778,000 people filed for unemployment benefits for the first time last week. Economists polled by Dow Jones expected initial jobless claims to come in at 733,000.

Oil prices climbed to the highest in more than eight months on Wednesday, after data showed a surprise drop in U.S. crude inventories last week, extending a rally driven by hopes that a COVID-19 vaccine will boost fuel demand.

Brent crude was up 47 cents, or 1%, at $48.33 a barrel, having risen almost 4% in the previous session. West Texas Intermediate crude gained 80 cents, or 1.8%, to settle at $45.71 per barrel, after rising more than 4% on Tuesday.

U.S. crude inventories fell by 754,000 barrels last week, data from the U.S. Energy Information Administration showed, compared with analysts’ expectations in a poll for a 127,000-barrel rise. Inventories at Cushing, Oklahoma, the delivery point for WTI, fell by 1.7 million barrels.

“There was a decent drawdown at Cushing, so that’s supportive. It was probably the most bullish aspect of this report,” John Kilduff, partner at Again Capital LLC in New York.

Gold rose on Wednesday as an unexpected rise in U.S. jobless claims slammed the brakes on the previous day’s rally on Wall Street, and the precious metal bounced off a sharp slide toward $1,800 in prior sessions.

Spot gold rose 0.2% to $1,810.41 an ounce, a day after hitting its lowest since July 17 at $1,800.01. U.S. gold futures gained 0.3% at $1,809.10.

The S&P 500 and the Dow retreated on signs of a slowdown in the labor market recovery. On Tuesday, Wall Street rallied to a record as progress on vaccines and a smooth White House transition bolstered bets on a swifter economic rebound.

The jobless data is supportive for gold “just on notions that we’ve still got a very dark period ahead before we get through this pandemic,” Kitco Metals senior analyst Jim Wyckoff said.

The European Central Bank will announce the minutes of the October monetary policy meeting today and Germany GfK Consumer Climate for December will be released today.