HiFX morning Update, December 10, 2018

The NZDUSD opens at 0.6855 (mid-rate) this morning.

Trade war concerns continue to dampen market sentiment.

US equities came under pressure on Friday on the back of a disappointing jobs report, while and Fed comments suggesting the Federal Reserve could slow the pace of tightening next year saw the USD give back some of its recent gains.

Friday’s non-farm payroll report showed employment increased by 155k jobs in November well below the forecast 200k number with October’s previously reported 250k jobs rise downwardly revised to 237k. Average earnings increased by 0.2% m/m again below the expected 0.3% increase with Octobers result also downwardly revised to a 0.1% increase from the originally reported 0.2% uptick. Unemployment remains at 3.7% in line with expectations.

Fed policy makers speaking on the final day before officials enter a blackout period for public comment ahead of their Dec. 18-19 meeting have again signalled that the Fed could be about slow the pace of rate hikes next year. Fed Governor James Bullard an upcoming voter on interest rates believes the federal funds rate is already above neutral and has called for the Fed to pause its hiking cycle. “Inflation is low and looks to be very stable”, and the recently narrowed yield curve, is signalling market concerns that the Fed is too “hawkish,” Mr Bullard said.

Crude oil prices surged higher on Friday after OPEC and non-OPEC members agreed to reduce crude production next year. Friday’s meeting in Vienna concluded with OPEC members agreeing to cut production from October’s levels by 800k barrels per day, with non-OPEC members led by Russia, agreeing to reduce output by 400k barrels per day.

The main focus for investors this week will be Tuesday evening UK parliamentary Brexit vote with the results due out early on Wednesday our time.

Global equity market closed out the week mixed, - Dow -2.24%, S&P 500 -2.33%, FTSE +1.10%, DAX -0.21%, CAC +0.68%, Nikkei +0.82%, Shanghai +0.03%.

Gold prices edged higher Friday, up 0.3% closing out the week at $1,247 an ounce. WTI Crude Oil prices ended Friday sharply higher, up 3.0%% and trading at $52.81 a barrel.

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