US Non-Farm Payrolls (NFP): On Friday, the US labor market will take center stage with the release of Non-Farm Employment Change, Average Hourly Earnings, and Unemployment Rate data, which could drive significant volatility in USD pairs.
US ISM Manufacturing and Services PMI: Key indicators of US economic health, with both Manufacturing and Services PMI expected to influence market sentiment.
Swiss CPI and US Fed Chair Powell Speech: The CPI data from Switzerland and a highly anticipated speech from Fed Chair Powell will provide insights into inflation trends and monetary policy direction.
What Now?
This week, all eyes are on the US labor market data. The Non-Farm Payrolls (NFP) report, along with unemployment rate figures and average hourly earnings, will be pivotal for determining the direction of the USD. Given the recent hawkish comments from the Federal Reserve, market participants will be watching these labor figures closely for signs of continued economic strength or weakening, which will help gauge the probability of future rate decisions.
On the PMI front, both the ISM Manufacturing and Services PMI reports will provide a crucial snapshot of economic activity. The ISM Manufacturing PMI on Monday and ISM Services PMI on Wednesday are expected to show mixed results, with manufacturing activity under pressure while services remain relatively resilient.
Meanwhile, the Swiss CPI on Tuesday will be critical for understanding inflation dynamics in Switzerland, potentially impacting the CHF. Inflation has remained subdued, and a lower-than-expected figure could prompt expectations of further easing measures from the Swiss National Bank.
Fed Chair Powell is set to speak on Wednesday evening, and his tone will be closely monitored. With the market’s rate-cut expectations shifting lower, Powell’s remarks could either solidify current market sentiment or shift the trajectory of rate expectations heading into 2025.
Market Events and Announcements:
Times below are GMT +2.
Monday, December 2, 2024:
5:00 PM – USD: ISM Manufacturing PMI: A key indicator for the US manufacturing sector, providing insights into overall economic health.
Tuesday, December 3, 2024:
9:30 AM – CHF: CPI m/m: Inflation data from Switzerland, a key indicator for monetary policy decisions by the SNB.
5:00 PM – USD: JOLTS Job Openings: Provides insights into labor demand, an important indicator for the Federal Reserve in gauging labor market strength.
Wednesday, December 4, 2024:
2:30 AM – AUD: GDP q/q: Australian GDP growth data, critical for understanding economic momentum and setting expectations for RBA policy.
3:15 PM – USD: ADP Non-Farm Employment Change: A precursor to the NFP, providing early insights into US employment trends.
5:00 PM – USD: ISM Services PMI: This figure will offer insight into the non-manufacturing sectors of the economy, which represent the largest portion of US economic activity.
8:45 PM – USD: Fed Chair Powell Speaks: Powell’s comments could provide crucial guidance on future rate movements, especially given the recent uncertainties.
Thursday, December 5, 2024:
3:30 PM – USD: Unemployment Claims: Weekly jobless claims, giving a pulse on the labor market.
Friday, December 6, 2024:
3:30 PM – CAD: Employment Change & Unemployment Rate: Critical labor market data from Canada that could have a significant impact on CAD pairs.
3:30 PM – USD: Average Hourly Earnings m/m, Non-Farm Employment Change, Unemployment Rate: A combination of labor data that will dictate the trajectory of the USD and potentially impact Federal Reserve decisions.
Market Insights: Key Charts to Watch
Chart 1: Gold (XAU/USD) – Daily Chart
After dipping at $2536.75, gold is benefitting from the weaker dollar as rate cut expectations mount. Gold prices are currently trading at around $2,662.56, testing a key Fibonacci retracement level at 50% ($2,663.39) of the recent downtrend. Gold remains within an upward sloping channel, supported by a weighted moving average at $2,608.68.
If gold maintains its position above the 50% Fibonacci level, we could see a continuation of the bullish move towards the 61.80% Fibonacci level at $2,693.27. A break above this could propel gold towards the 78.60% retracement at $2,735.82. Recent RSI readings suggest a potential return of positive momentum, with Bollinger Bandwidth shrinking, indicating reduced volatility that could precede expansion.
Alternative Scenario:
If gold fails to hold above the $2,662.56 level, a reversal towards the lower end of the channel at $2,596.52 (23.60% Fibonacci retracement) may occur. The overall trend remains bullish as long as gold stays within the linear regression channel, but a breach could lead to a retest of the two-month low at $2,536.75 level.
Impactful Events:
Key drivers for gold this week include Fed Chair Powell’s speech and US Non-Farm Payrolls. A dovish stance from Powell could boost gold, while stronger-than-expected US labor data may put pressure on prices.
Key Levels:
Support: $2,596.52, $2,536.75
Resistance: $2,693.27, $2,735.82
Chart 2: USD/CHF – Daily Chart
USD/CHF is currently trading at 0.88061, hovering just above the 100% Fibonacci retracement level of the latest upswing. There is a visible bearish divergence on the %b oscillator, indicating potential downside pressure towards the uptrend line.
Despite the recent rally, the pair remains entrenched in a long-term downtrend, with the divergence emerging right at the crucial trendline resistance. Sellers are currently testing the mid-November support level at 0.88007, and if they successfully break below it, this could pave the way for further declines towards the 127.20% Fibonacci extension at 0.87581. A decisive break below this support could intensify bearish momentum, potentially driving the pair down to 0.87359 (141.40% extension) and eventually to 0.87040 (161.80% extension) and 0.86442 (200.00% extension).
Alternative Scenario:
Should the pair manage to find support at the 0.88007 level, a bounce towards the 61.80% Fibonacci retracement at 0.88605 is likely. A sustained move above this level could negate the bearish outlook, targeting 0.89572, which marks the previous peak.
Impactful Events:
USD/CHF will be influenced by Swiss CPI on Tuesday and the US employment data on Friday. Any divergence between the Swiss and US economic outlooks will have significant repercussions on this pair.
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