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Powell spillover continues

The dollar continued to decline on Thursday in what was seen as a continuation of the effect from the Fed’s Powell speech on Wednesday, recording the worst monthly performance since 2010.

Stocks traded sideways but closed negative as traders await confirmation from the Nonfarm payrolls. Commodities and FX currencies continued to gain from a weaker dollar.

Key factors for today:

• Dollar records worst day since 2010


• ISM Manufacturing into contraction


• G7 still undecided on oil price cap


• China’s covid situation improves more

Dollar’s fall supports FX further

Core PCE inflation rose below estimates on Thursday, setting the stage for Thursday’s session as the figures further supported Fed’s slowing narrative. Data were welcomed by markets, with key FX pairs recording notable gains.

EUR/USD rose 1.15% above $1.05, cable ended the session 1.69% higher after hitting the ceiling at $1.23, and USD/JPY dropped a staggering 2.04% to 135.00.

Gold surges 1.95% as US PMI falls into contraction

US PMIs confirmed a substantial move into contraction after ISM Manufacturing PMI for November slid to 49 for the first time since May 2020. Gold was impacted positively as fears of a recession were exacerbated by the disappointing print. Silver also soared by 2.60%. Both recorded a 3-day streak. Gold has support $1785/oz and silver at $22.26/oz.

US Initial jobless claims also came in above expectations, significantly increasing Challenger layoffs.

WTI on a 3-day streak, but no price cap agreement yet

Reportedly EU 7 countries are pushing for a dynamic price cap on n seaborne oil exports, but the divide on price remains. A proposed formula would have the price revised every two months. A G7 official said they are very near to agreeing on a $60/bbl price cap.

WTI oil recorded a 3-day streak at $84/bbl on Thursday, lent a hand from the greenback, but subdued to a close of $81.85/bbl on the back of supply worries from loosening sanctions on Venezuelan oil. $80/bbl is major support.

EU jobs improvement

EU unemployment unexpectedly ticked down to 6.5% from 6.6% in October, while Macron visited Biden in the White House to address tensions over the Inflation Reduction Act’s subsidies on semiconductors. EU PMIs remained in contraction but confirmed preliminary results, letting the euro perform.

Continued optimism out of China

Chinese health officials highlighted a new phase of omicron variant weakening and increased vaccination rates while not mentioning “dynamic Covid zero”. Both are seen as signs of a pivot towards easing restrictions.

Rail strike averted

The US Senate voted for a bill that imposes the deal negotiated in November that Union members voted down. Once signed into law, it would make it illegal for rail workers to strike.

Movers/shakers

• G-III Apparel -45% following a significant earnings miss below estimates and ample build in inventories; cut outlook for earnings


• Land’s End -30% as it missed both top and bottom lines and EBITDA; guidance for the final quarter was worse than expected, mentioned supply chain issues


• Okta +27% after it beat top and bottom lines and raising guidance. Billings was also well ahead of expectations


• Designer Brands -25% on earnings miss, but improved compared to the prior year; said it was facing challenges in the retail space and cut outlook


• Splunk +18% on earnings beat by a wide margin, highlighting strong license demand; also raised outlook for the year

On the docket

• Canada and US jobs reports


• Fed Evans speech

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