Volatility across all asset classes is up again to start the month. American futures are solidly in the green this morning after a large sell-off yesterday afternoon.
Overview
The push and pull have left the U.S. Dollar Index little changed but there is plenty of movement in individual crosses. The market is still trying to digest a hawkish shift from Federal Reserve Chairman Jerome Powell. Yesterday he said that he would retire the word “transitory” when speaking about inflation. Traders immediately pushed up expectations of the first interest rate hike. Money markets are now pricing in a 50% chance that the first-rate hike could come in May of next year. The prospect of less monetary support and the threat of a new variant of the coronavirus led to a deep rout in risk sentiment yesterday.This morning’s economic data has given sentiment a lift. ADP reported that private companies added 534K jobs to their payrolls in November, beating estimates of 525K. Firms added 570K jobs in October. Attention will shift to manufacturing PMI and ISM manufacturing due out at 9:45 a.m. and 10 a.m. President Joe Biden will give a speech on the economy and supply chain issues at 12:35 p.m.
What to Watch Today…
- President Joe Biden delivers remarks on the economy at 12:35 p.m.
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AUD
The Australian dollar popped as much as seven-tenths against the U.S. dollar before moderating its gains. Data showed that Australia’s economy posted a smaller-than-forecast contraction. The economy shrank 1.9% last quarter, mostly due to a lockdown across the east coast. Economists expected a worse reading of a 2.7% drop. The New Zealand dollar was able to ride the Aussie’s coattails and gain as much as 0.6%.
GBP
The British pound is a touch stronger this morning following decent economic data released in the U.K. A manufacturing survey showed continued growth in the U.K. and a reading of house prices improved. Overall, the British pound remains under pressure. The sterling lost 2.5% versus the U.S. dollar over the course of the last month as the greenback flexed its muscles against most of its peers.
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