Here are the latest developments in global markets:
FOREX: The dollar gained further momentum, crawling towards a fresh three-week high of 113.58 (+0.36%) versus the yen during early European trading hours as investors remained confident after a potential government shutdown in the US was averted on Thursday. The dollar index broke above the 94 key level (+0.25%). The pound stalled around 1.3463 (-0.19%) after reaching a four-day high of 1.3512 against the greenback, while it consolidated near six-month highs versus the euro (+0.10%). Although the EU announced that "sufficient progress" has been made on Brexit talks, the President of the European Council, Donald Tusk, signaled that building future relations would be even harder. Euro/dollar weakened to 1.1735 (-0.30%).
STOCKS: European stocks continued to rally on Friday following their Asian counterparts with bank stocks leading the indices as the Basel Committee on Banking Supervision set new rules to measure asset risks which could reduce capital requirements. The pan-European STOXX 600 was 0.86% up at 1100GMT, the German DAX 30 surged by 1.37% and the Spanish IBEX 35 climbed by 0.92%. The British FTSE 100 moved up by 0.26% as Brexit fears eased – yesterday’s rise in sterling acted as a drag on the exporter-heavy benchmark.
COMMODITIES: Oil prices moved up after data showed on Friday that Chinese crude imports stood at record highs in November, raising prospects for improving demand. WTI crude rose by 1.25% to $57.40 per barrel and Brent increased by 1.17% to $62.93. Gold remained flat at $1,246 per ounce.
Day ahead: Nonfarm payrolls in focus but wage growth takes the stage
Next on Friday, US Nonfarm payrolls will be closely watched, with analysts predicting 200,000 new entrants joining the labour force in November compared to the 261,000 seen in October. The report is due at 1330GMT and will also include readings on the unemployment rate and average hourly earnings which would be in focus as Fed policymakers look for clues to justifying further policy normalization moving ahead. Particularly, the Fed thinks that a tighter labour market reflected by the unemployment rate which currently stands at the lowest level since 2000 will lead to higher wage growth and therefore lift inflation to the Fed’s target of 2.0%. Forecasts are for the jobless rate to remain flat at 4.1% in November and for average hourly earnings to rise by 0.3% after remaining unchanged in the previous month.
In other data releases, the Canada Mortgage and Housing Corporation will deliver figures on housing starts for the month of November at 1315GMT. The number of new constructions is anticipated to slow down by 1,800 to 221,000.
Traders will also be eager to hear any updates on Brexit developments after the EU and the UK managed to unlock negotiations on early Friday by reaching a preliminary agreement on three key divorce issues involving the Irish border, the rights of EU citizens and the UK’s financial obligations to the block. However, the agreed outline must be formally approved by the EU leaders at next week’s summit starting on December 14 for talks to move officially to transitional period and future trade relations.
