European Open: US government avoids shutdown, NFP in focus

Asian Futures:

• Australia's ASX 200 futures are up 52 points (0.72%), the cash market is currently estimated to open at 7,301.50
• Japan's Nikkei 225 futures are up 110 points (0.4%), the cash market is currently estimated to open at 27,863.37
• Hong Kong's Hang Seng futures are down -135 points (-0.57%), the cash market is currently estimated to open at 23,474.64
• China's A50 Index futures are up 89 points (0.58%), the cash market is currently estimated to open at 15,591.74

UK and Europe:

• UK's FTSE 100 index fell -39.47 points (-0.55%) to close at 7,129.21
• Europe's Euro STOXX 50 index fell 0 points (0%) to close at 0.00

Thursday US Close:

• The Dow Jones Industrial rose 617.75 points (1.82%) to close at 34,639.79
• The S&P 500 index rose 64.06 points (1.42%) to close at 4,577.10
• The Nasdaq 100 index rose 113.045 points (0.71%) to close at 15,990.76

Funding was set to run out on Friday at midnight EST, but Democrats voted 69-28 to keep the lights on until February 18^th, just hours after the Senate won the vote to approve the measures just hours earlier (by 221 – 212, with one Republican voting in favour). S&P 500 E-mini futures are down around -0.17 although the overnight low respected the previous record high set in September, which makes 4550 a pivotal area this session.

Metals hang onto their weekly lows ahead of NFP

Silver has found resistance around $22.50 overnight and is forming a potential bear-flag. Markets are clearly positioned for a strong employment report, which in effect is a proxy for a faster Fed taper and hike. Next support is around $ with the monthly S1 pivot just below it, whilst a break above $23.0 warns of a trend reversal on the hourly chart.

As for gold we mentioned the important of 1758 support in today’s video, and it could make an initial bearish target today should NFP come in strong. Whereas a surprise miss would bring 1780 into focus with a break above 1782 warning of a change in trend on the hourly chart.

Perhaps WTI has finally seen its low

From peak to trough WTI has fallen around -23% from October’s high. Yet a bullish hammer formed on the daily chart yesterday with above-average volume, and its low held above the August low. We therefore suspect it could be time for a bounce form current levels.

US and Canadian employment released simultaneously today

Employment remains the key for the Fed to tighten policy faster. We all know inflation is ripping the roof off, but the Fed want to see continued improvement, with one Fed member saying yesterday that whilst he wants to accelerate the pace of bond purchase tapering he wants to see continued momentum in the monthly payroll report. Economists expect 553k jobs to be added, up from 531k, so perhaps another cool half a million will suffice to get the US dollar bid today.

Canada’s employment softened last month to end a stellar run of job growth, although the unemployment rate fell to a 20-month low whilst hours worked returned to pre-pandemic levels. Unemployment is expected to fall further to 6.6% today whilst adding 35k jobs.

USD/CAD is an obvious go-to currency pair around today’s double-bill employment reports. The daily trend is firmly bullish on the daily chart with strong demand apparent above 1.2700. Yet we have noted that USD/CAD has failed to close above the 1.2820 (close) high over the previous three days, so it may make an interesting countertrend set-up should job growth surprise to the downside in the US and bear in Canada. 1.2775 may provide immediate support for bears but a break of it opens-up a ruin for the lows just above 1.2700. Should US data outperform then we would want to see a clear break of this week’s highs before assuming bullish trend continuation.

Choppy trade on the FTSE

Price action on the FTSE 100 looks like it still wants to move higher, having found support at its 200-day eMA, yet yesterday’s bearish inside day which closed bac below the monthly pivot was a little underwhelming. Looking at the futures charts also highlights how ‘sticky’ prices are around 7110/20 as its been the most actively traded price over the past 28 hours and 20 days. For that reason, we’d prefer to stick to range trading strategies until the FTSE break above 7200.

FTSE 350: 4083.04 (-0.55%) 02 December 2021

• 73 (20.80%) stocks advanced and 267 (76.07%) declined
• 0 stocks rose to a new 52-week high, 14 fell to new lows
• 47.58% of stocks closed above their 200-day average
• 8.83% of stocks closed above their 20-day average

Outperformers:

• + 13.46%-Auction Technology Group PLC (ATG.L)
• + 3.60%-Workspace Group PLC (WKP.L)
• + 2.59%-Essentra PLC (ESNT.L)

Underperformers:

• -8.98%-Darktrace PLC (DARK.L)
• -8.60%-AJ Bell PLC (AJBA.L)
• -8.05%-Aston Martin Lagonda Global Holdings PLC (AML.L)

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