Macro Roundup (Dec 7)

SHANGHAI, Dec 7 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The dollar fell to a 2-1/2-year low on Friday, on track for its worst week in a month, as investors shrugged off a November U.S. non-farm payrolls report that badly missed expectations and focused on a flurry of positive vaccine news.

Upbeat announcements on COVID-19 vaccines have helped drive a rally in riskier currencies at the expense of the safe-haven dollar.

Data showed that U.S. non-farm payrolls increased by 245,000 jobs last month after rising by 610,000 in October. That was the smallest gain since the jobs recovery started in May.

Despite the weak jobs data, Don Curren, market strategist at Cambridge Global Payments, said “the key drivers in foreign exchange are likely to remain the two narratives that have dominated trading in recent sessions - excitement over the renewed possibility that Congress might forge another fiscal stimulus package in the U.S., and enthusiasm about the rapid progress being made on the development of vaccines for COVID-19.”

On Wall Street, U.S. stock futures were little changed on Sunday night following a record-setting session as Wall Street searched for clues on additional fiscal aid.

Dow Jones Industrial Average futures traded lower by just 9 points, or less than 0.1%. S&P 500 dipped 0.1%, and Nasdaq 100 futures advanced 0.1%.

The major averages posted intraday and closing all-time highs on Friday, with the Dow popping more than 200 points. The S&P 500 and Nasdaq Composite advanced 0.9% and 0.7%, respectively.

Brent crude oil futures rose to just under $50 a barrel on Friday as expectations of a U.S. economic stimulus package and the possibility of a vaccine for the coronavirus overrode rising supply and increased COVID-19 deaths.

A bipartisan $908 billion coronavirus aid plan gained momentum in the U.S. Congress.

OPEC+, comprising of the Organization of the Petroleum Exporting Countries and its allies, agreed on a compromise to increase output slightly from January but continue the bulk of existing supply curbs to cope with coronavirus-hit demand.

OPEC and Russia on Thursday agreed to ease deep oil output cuts from January by 500,000 barrels per day with further as yet undefined increases on a monthly basis, failing to reach a compromise on a broader policy for the rest of 2021.

Gold fell on Friday as investors booked profits from sharp gains in the previous sessions while equities rallied, but bets for fresh U.S. stimulus buoyed bullion’s appeal as an inflation hedge and kept it on track for its first weekly gain in four weeks.

Spot gold was down 0.3% at $1,834.92 per ounce, on track for a weekly gain of about 2.6%. U.S. gold futures settled down 0.1% at $1,840.

“After a superb four-day bounce, gold is running into profit-taking ahead of a key technical level at $1,850; considered a significant hurdle as it was remarkably resilient as support over the past two months,” said Tai Wong, head of base and precious metals derivatives trading at BMO.

On the coronavirus front, More than 14 million Covid-19 cases have been confirmed in the U.S. along with over 282,000 coronavirus-related deaths, according to data from Johns Hopkins University. Hospitalizations have also reached record levels in the U.S. The increasing number of coronavirus cases has led some states and cities to reimpose stricter social distancing measures to curb the outbreak.

“Renewed lockdown restrictions in response to the third wave of the pandemic are likely to weigh on the economy in coming months, but we don’t expect a double dip,” said Yardeni. “The economy could be booming next spring if enough of us are inoculated against the virus.”

Key economic data slated for release today include China’s foreign exchange reserve and trade balance for November, Germany October industrial production after seasonal adjustments and Eurozone Sentix Investor confidence index for December.