Daily Market Update

Volatility Persists Ahead of Tomorrow’s Jobs Data

December 02, 2021

Volatility remains the only constant in the market these days. U.S. equity futures are on the rise after global shares dumped value yesterday.

Overview

The day-to-day yo-yo in risk sentiment has created opportunities for investors but headaches for market analysts. The uptick today is a bit of a relief after the S&P 500 suffered its worst two-day loss in a year. Markets are worried that the Federal Reserve has taken a hawkish shift towards combatting inflation but there are positive signs that the Omnicron strain of Covid-19 is no deadlier than previous strands. Volatility across all asset classes is likely to remain through the end of the year.

The U.S. economic docket is fairly light today with only initial jobless claims data out at 8:30 a.m. We will also keep a close eye on developments following the OPEC+ meeting and President Biden will outline his winter Covid plan this afternoon. There are also four Fed presidents on today’s docket who are likely to reinforce the hawkish pivot we saw from Fed Chairman Jerome Powell earlier this week.

 

What to Watch Today…

  • Weekly jobless claims at 8:30 a.m.

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EUR

While many asset classes and individual currency pairs have seen more volatility as of late, EUR/USD has been largely unchanged over the past two days.  The Euro was up 0.2% overnight but is flat since late Tuesday.  There is nothing on today’s docket that is likely to cause a large shift, but that could change tomorrow morning as traders await the release of U.S. Non-farm payrolls at 8:30 EST. From a thirty thousand feet view, the Euro is still weak against the U.S. dollar. While the common currency is down nearly 2% over the past month, it is still a full percent higher from its lows near Thanksgiving.

 

CAD

The Canadian dollar and other commodity-based currencies could also see a jump in volatility today.  Oil cartel OPEC+ ends their two-day meeting today.   Energy experts expect OPEC to announce a deferral in their scheduled supply hike.  Yesterday OPEC’s own experts said that they forecast a surplus in oil markets in the first quarter of last year, putting downward pressure on the price of oil.  The price of WTI was down to 66$ a barrel, well off the November highs of $85.

 

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