Today’s main events are the US ADP employment and initial jobless claim figures, both of which are indicative of the hugely important NFP report out tomorrow. In the UK, PMI numbers for December are also to be released Last night, financial markets reacted differently after the release of the FOMC Minutes. While the Stock markets continued their march forward, the Dollar fell, threatening a trend reversal. Minutes revealed that the FOMC members think the economic outlook is very ‘uncertain’ until we get more information about President elect Donald Trump’s actual economic policy. Almost all FOMC members think there are upside risks to their growth forecasts due to the likely fiscal boost, which they have not fully taken into account.
Currencies: The Dollar Index fell overnight, exacerbated by the thin liquidity of the Asian session, and dropped sharply to 101.86 from 103.42 yesterday. EURUSD staged an impressive reversal and broke 1.0550 resistance to trade as high as 105.73 from 1.0378 yesterday. The fall of the Dollar was evident across the board with GBPUSD rebounding over 140 pips from yesterday’s lows, while the USDJPY dropped as low as 260 pips to trade at 115.56 from 118.20 highs just yesterday. The most notable mover of the night was the Chinese Reminbi though which traded at 5 week highs against the Dollar in its third largest one-day gain ever.
Stocks: Overnight, U.S. stocks were higher after the close on Wednesday, as gains in the Basic Materials, Financials and Consumer Services sectors led shares higher. At the close in NYSE, the Dow Jones added 0.30%, while the S&P 500 index climbed 0.57%, and the climbed 0.88%. Asian shares were mixed on Thursday with mainland China and Hong Kong gaining on a solid services PMI reading, while Japan edged down as the dollar weakened overnight.
Oil and Gold:Oil prices rose nearly 2% on Wednesday on expectations U.S. crude inventories have dropped and on signs that the world’s top oil exporters will stick to agreed output cuts that took effect this week. Gold prices hit a 4 week high as the Dollar weakened. The yellow metal has peaked at $1179 earlier where it is facing strong resistance. Should a break occur, the next target could be $1192.