Daily Market Outlook, December 2, 2022

‘Markets Marking Time Ahead Of Non-Farm Payrolls Release

Wall Street took a breather following the post-Powell-inspired rally, consolidating above the 4000 level, some softer manufacturing data was digested along with several Fed members who reiterated the call for a focus on fighting inflation with restrictive monetary policy. Asian markets have been somewhat subdued overnight, with the Nikkei the standout underperformer following comments from the Bank of Japan’s Tamura, who suggested it was time for a review of the bank's ultra-easy monetary policy. Reports from China continue to point towards a curbing of restrictive Covid policies, the upcoming CPC politburo meeting is poised to confirm a more reasonable approach to Covid controls.

On the data front for the day ahead, the focus is firmly on the US Non-Farm Payrolls release, markets expect circa 200k jobs to have been added this month, anything above this level may be a catalyst for a further pullback in the equity rally which in turn could add some support to the greenback on the back end of its worst monthly performance since 2010. Whispers are for a softer print after this week’s ADP miss, a rise in weekly continuing claims, a spike in challenger job cuts, and a drop in ISM’s employment sub-index. Specifically, the jobs data markets are still primarily in a “bad news is good news” and vice versa setup (but we may be approaching the end of the line in regard to this type of thinking). Noteworthy, when Wall Street sold off yesterday after the ISM miss, 49 vs 49.7 expected and now in contractionary territory, growth and recession concerns were highlighted more than how much higher rates can go after Powell’s speech, most investors finally accepted a 5% ballpark for the terminal rate into 2023

Overnight Headlines

  • China Leaders May Signal Policy Shift To Economy From Covid Zero

  • PBoC Governor: To Support Growth, Sees Moderate Inflation In 2023

  • BoJ's Kuroda: Japan's Inflation Is Expected To Decelerate From 2023

  • BoJ Board Member Calls For Policy Review At The Right Time

  • Australian Central Bank Has Traders Primed For New Rate Surprise

  • US Jobs Growth Expected To Have Slowed Again In November

  • Barr Says Fed Could Slow Hike Pace As Soon As December Meeting

  • Fed's Williams: Too High Inflation Calls For More Fed Rate Hikes

  • Biden Says Can 'Tweak' Inflation Act To Include European Countries

  • Senate Votes 80-15 To Pass Bill Blocking Nationwide Railroad Strike

  • ECB’s Lagarde Sees Need To Ensure Inflation Returns To Goal

  • Oil Prices Edge Higher On Easing Covid Curbs In China, Firm Dollar Limits Gains

  • G7 Coalition: 'Very, Very Close' To Deal On Russian Oil Price Cap

  • Stocks Decline In Asia As US Jobs Report Takes Main Focus

Technical & Trade Views

SP500 Bias: Bullish Above Bearish Below 4050

Technicals

  • Primary support is 4050

  • Primary upside objective is 4120

  • Next pattern confirmation, acceptance above 4050

  • Failure below 3930 opens a test of 3900

  • 20 Day VWAP bullish, 5 Day VWAP bullish

EURUSD Bias: Bullish Above Bearish below 1.04

Technicals

  • Primary support is 1.04

  • Primary upside objective is 1.0620

  • Next pattern confirmation, acceptance above 1.05

  • Failure below 1.0350 opens a test of 1.0220

  • 20 Day VWAP bullish, 5 Day VWAP bullish

  • Today’s New York Cut Option Expiries: 1.0350 (1.18BLN), 1.0360-65 (1.08BLN)

  • 1.0375-80 (334M), 1.0390-00 (1.08BLN), 1.0420 (923M)

  • 1.0435 (509M), 1.0450 (339M), 1.0475 (709M)

  • 1.0500 (306M), 1.0525 (302M), 1.0600 (579M)


GBPUSD Bias: Bullish Above Bearish below 1.21

Technicals

  • Primary support is 1.21

  • Primary upside objective 1.24

  • Next pattern confirmation, acceptance above 1.2250

  • Failure below 1.20 opens a test of 1.1930

  • 20 Day VWAP bullish, 5 Day VWAP bullish

  • Today’s New York Cut Option Expiries: N/A

USDJPY Bias: Bullish above Bearish Below 137.60

1.36 Target Achieved, New Pattern Emerging

Technicals

  • Primary resistance is 137.60

  • Primary downside objective is 134

  • Next pattern confirmation, acceptance below 135

  • Acceptance above 140 opens a test of 142

  • 20 Day VWAP bearish, 5 Day VWAP bearish

  • Today's New York Cut Option Expiries: 135.00 (478M).

  • EUR/JPY: 140.00 (510M) 141.00 (320M), 142.50-60 (706M), 142.95-00 (818M)

AUDUSD Bias: Bullish Above Bearish below .6700

Technicals

  • Primary support is .6700

  • Primary upside objective is .6900

  • Next pattern confirmation, acceptance above .6775

  • Failure below .6700 opens a test of .6600

  • 20 Day VWAP bullish, 5 Day VWAP bullish

  • Today’s New York Cut Option Expiries: 0.6675 (463M), 0.6825-35 (619M)

  • USD/CAD: 1.3400 (493M), 1.3415 (380M), 1.3500 (538M) 1.3520-25 (632M)

BTCUSD Bias: Intraday Bullish Above Bearish below 16500

17100 Target Achieved, New Pattern Emerging

Technicals

  • Intraday 16500 is primary support

  • Primary upside objective is 18000

  • Next pattern confirmation, acceptance below 17200

  • Failure 16400 opens a test of 16000

  • 20 Day VWAP bearish, 5 Day VWAP bullish