OPEC+ Said to Agree to 500k bpd Cut US & Canada Job Reports Up Next

SUMMARY

ANALYSIS

USDCAD

Dollar/CAD is marking time this morning, between chart support at the 1.3160s and chart resistance at the 1.3180s, as traders await the OPEC+ press conference and the November employment reports out of the US and Canada at 8:30amET.  A Reuters source has said that OPEC+ has agreed to a 500k bpd increase in oil production cuts, which would bring the quota to 1.7M bpd.  Oil markets don’t seem all that enthusiastic as rumors had circulated this week about a even larger cut (800k bpd), plus the topic of non-compliance with the existing quota from various OPEC+ members doesn’t seem to have been addressed.  Expectations for this morning’s US Non-Farm Payrolls report are +180k new jobs, +3.0% YoY growth in wages, and 3.6% on the unemployment rate.  The Canadian report is expected to show +10k jobs created and 5.5% on the unemployment rate.  Wages grew +4.3% YoY in October.

We think the risk today lies in a potentially weaker than expected US jobs report (because of the weak ISM and ADP employment numbers released earlier this week) and a potentially stronger than expected Canadian jobs report (think part-time seasonal hires from last year's November report).  Such an outcome would be double-whammy bearish development for USDCAD in our opinion and would put trader sights on the low 1.31s.  Over 750mlnUSD in options expire between 1.3165 and 1.3175 this morning at 10amET, which could also make the post-employment report reaction interesting.

USDCAD DAILY

USDCAD HOURLY

JAN CRUDE OIL DAILY

EURUSD

Euro/dollar is holding up rather well again this morning, despite another bad economic number being reported out of Germany this week. Industrial Output, released at 2amET, for the month of October, fell 1.7% YoY vs expectations for a slight gain of +0.1%.  Perhaps traders are more interested in the US Non-Farm Payrolls (NFPs) report up next, plus what’s looking to be yet another large option expiry at 10amET (2.4blnEUR between 1.1095 and 1.1125).  Expect the market to break to new swing highs in the 1.11s should we get weak NFPs and to conversely re-test the mid-1.10s should we get a strong report.

EURUSD DAILY

EURUSD HOURLY

FEB GOLD DAILY

GBPUSD

Sterling traders appear to be taking profits this morning ahead of the US NFP report and the weekend (which could feature some negative developments on the UK election poll front).  Jeremy Corbyn is trying to start some ruckus today by revealing a secret document showing Boris Johnson “misled” voters on Brexit, but it doesn’t seem to be ruffling the market’s feathers all that much.  More here from the Business Insider.  Over 700mlnGBP in options expire at the 1.3100 strike at 10amET this morning, which could be a natural magnet for spot GBPUSD prices should the NFP report beat expectations. 

GBPUSD WEEKLY

GBPUSD HOURLY

EURGBP DAILY

AUDUSD

The Australian dollar is trying to inch above familiar downward sloping trend-line resistance (now in the 0.6840s), but the upcoming US Non-Farm Payroll report and a looming 1blnAUD option expiry at 0.6835 is hampering the market’s upside momentum at this hour.  We’ll get an updated read on the leveraged fund AUDUSD short position at 3:30pmET (as of Dec 3rd) via the CFTC’s weekly Commitment of Traders Report.

AUDUSD DAILY

AUDUSD HOURLY

USDCNH DAILY

USDJPY

Dollar/yen is slipping lower as NY trade gets underway today, after chart support in the 108.60s gave way in early European trade.  US 10yr yields are trading steady between support at 1.7550% and resistance at 1.82%.  Off-shore dollar/yuan is the notable mover today; slipping all the way back to chart support in the 7.0300 area.  If the Chinese yuan closes NY trade in and around here, it will mark a rather bearish weekly reversal on the USDCNH chart.  Does this portend some “risk-on” US/China trade headlines over the weekend and into next week? 

USDJPY DAILY

USDJPY HOURLY

US 10YR BOND YIELD DAILY

Charts: Reuters Eikon

About the Author

Erik Bregar - Director, Head of FX Strategy

Erik works with corporations and institutions to help them better navigate the currency markets. His desk provides fast, transparent, and low cost trade execution; up to the minute fundamental and technical market analysis; custom strategy development; and post-trade services -- all in an effort to add value to your firm’s bottom line. Erik has been trading currencies professionally and independently for more than 12 years. Prior to leading the trading desk at EBC, Erik was in charge of managing the foreign exchange risk for one of Canada’s largest independent broker-dealers.

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