The Employment Report May Not Give Greenback Much Of A Reprieve

Overview: After wobbling late yesterday on what appears to be old news from Pfizer about a disruption of the vaccine's supply chain, equity markets have recovered, and risk appetites remain intact. With more than 1% gains in South Korea's Kospi and Taiwan's Taiex, the MSCI Asia Pacific benchmark secured its fifth consecutive weekly gain. While European bourses are firmer, the 0.2% gain only halves this week's loss, which threatens to snap a four-week rally.US shares are firm. The NASDAQ is up 1.4% this week coming into today, poised for its third consecutive weekly rise, while the Russell 2000 may end its four-week advance unless it gains around 0.35% today. Although Asia Pacific yields are lower after US yields softened yesterday and Australia's 10-year yield eased back below 1.0%, US and European yields are mostly firmer today. The US benchmark is up a couple of basis points higher at 0.93% and nine on the week, and seven wider against Germany. Recall that Fitch reviews its BBB- sovereign rating for Italy, and Moody's reviews Russia and Turkey's ratings today. The greenback remains heavy, but most of the majors are +/- 0.2%, though the threat from the Reserve Bank of New Zealand that it will consider buying foreign bonds is weighing on the Kiwi. Asian currencies are notably strong among emerging market currencies as the dollar pushes further below KRW1100, and the Taiwanese dollar extends its appreciation to levels not seen since 1997. The JP Morgan Emerging Market Currency Index is edging higher today to secure its fifth consecutive weekly rise. Gold initially extended its recovery to almost $1845 (from around $1765 on Monday) but ran into selling as it approached the 20-day moving average and the (38.2%) retracement of the leg lower since November 9. Oil is firm near nine-month highs in the OPEC decision, where the 500k barrel increase next month is still seen keeping the supply balance favorable.

Asia Pacific

As widely expected, the Reserve Bank of India kept its key rate steady at 4%. The repo rate began the year at 5.15%, and it was cut to 4.0% in two steps by May, where it has stood. Consumer inflation accelerating to 7.6% in October from 7.3% in September. The November CPI is due around the middle of the month and is expected to have softened to around 7.1%.  

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Read more by Marc on his site Marc to Market.

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