NEW YORK - NOVEMBER 5, 2020: Salvatore Ferragamo luxury retailer store at 5th Avenue. Image source: Leonard Zhukovsky © 123RF.com
US Unemployment Expected to Drop Marginally in November
The economic calendar is once again becoming action-packed following last week's relatively subdued schedule due to Black Friday. Arguably, the most significant event taking place over the following five days will be the release of the November Non-Farm Payrolls in the US on Friday.
Markets are currently being driven by reinvigorated investors' enthusiasm stemming from the anticipations for the development of a viable vaccine against the coronavirus. That is why traders will be hoping for another robust employment report to preserve the positive momentum.
The US labour market has enjoyed a six-months of consecutive reductions of headline unemployment, and most market experts project more of the same in November. According to the initial market forecasts, the unemployment rate is going to depreciate marginally to 6.8 per cent from the 6.9 per cent that was recorded previously.
US Unemployment Rate. Image source: TradingEconomics.com
Positive Non-Farm Payrolls data may be essential for the reeling dollar, which extended its losses on Friday. The greenback was hit last week after the publication of weaker-than-expected consumer confidence numbers for October.
The EURUSD advanced to its highest level since the 1st of September at the end of last week's trading session. The pair is currently trading at 1.18940, close to the psychologically significant resistance level at 1.20000.
The 180TH Meeting of the OPEC Conference Set Reaffirm Current Attitudes in the Oil Market
Following the recent OPEC-JMMC meeting, the leaders of the energy market are set to deliberate once again this week. The 180th meeting of the OPEC Conference is taking place all day today, whereas the 12th OPEC and non-OPEC Ministerial Meeting is scheduled for tomorrow.
Most market participants expect to see signs of conformity amongst the world's oil-producing states. Such indications would include demonstrations of their joint commitments to continue equilibrating the oil market by cutting aggregate production.
During the last meeting of the Joint Ministerial Monitoring Committee (JMMC) of OPEC, it was reiterated that it is of 'critical importance' for states to 'continue adhering to full conformity and compensating the overproduced volumes, in order to achieve the objective of market rebalancing'.
"The Committee noted the robust demand in Asia and the positive news of possible vaccines against the COVID-19 virus. These developments have been overshadowed by the resurgence of COVID-19 cases in major economies. The Committee noted that more stringent COVID-19 containment measures across continents, including full lockdowns, are impacting the oil demand rebound and that the underlying risks and uncertainties remain high."
The price of crude oil rose by more than $4 per barrel since these remarks were made, which is why OPEC meetings are of such great importance. The latest comments that are going to be expressed over this two-day conference are likely to have a comparable in magnitude impact on the price of the commodity.
RBA Can Allow Itself to be a Bit More Optimistic
The Governing Board of the Reserve Bank of Australia is scheduled to meet this Tuesday to deliberate on its underlying monetary policy stance. The consensus forecasts do not anticipate any changes to the Cash Rate, which is currently at 0.10 per cent.
While the global rise of Covid-19 cases continues to be a major point of concern for top bankers worldwide, the epidemic situation in Australia has somewhat eased over the last few weeks. This would give the Board some breathing room while assessing the impact of the remaining uncertainty on global and local growth.
Due to the observed rebound in global demand and mostly diminished fears, the Governing Council is also likely to refrain from bolstering its quantitative easing programs at the present moment. It is quite likely for the RBA to choose to continue monitoring the situation as it develops.
At any rate, the meeting of the Monetary Policy Board of RBA is likely to stir heightened volatility on all currency pairs involving the Aussie. As regards the AUDUSD, the pair has advanced to a fresh multi-weeks high last Friday, due to the aforementioned weakening of the greenback.
As can be seen on the daily chart below, the AUDUSD is currently testing the strength of the Resistance Area (in green), which could prompt a minor correction towards the major resistance (currently support) level at 0.73200.
These projections are supported by the fact that the pair is ostensibly overbought, as can be inferred from the Stochastic RSI indicator.
AUDUSD 1D Price Chart. Image source: Trendsharks ©, created with TradingView.com
Other Prominent Events to Watch for This Week:
Monday - Chinese Manufacturing PMI; ECB President Lagarde Speaks; German Harmonized Index of Consumer Prices (Preliminary).
Tuesday – UK Final Manufacturing PMI; Canada m/m GDP Growth Rate; US ISM Manufacturing PMI; FED Chair Powell Testifies; EU CPI Preliminary;
Wednesday – RBA Governor Lowe Speaks; Australia q/q GDP Growth Rate; Germany y/y Retail Sales; ADP Unemployment Change in the US.
Thursday – Unemployment Claims in the US; ISM Services PMI in the US; Australia m/m Trade Balance; EU m/m Retail Sales.
Friday – Unemployment Change in Canada.
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