Yesterday and Today:

Gold started out strong and gave much of its gains back late in the day.  It still ended positive closing at $1243.10 up from its previous close of $1242.60. Blind technicians can see what is a very suspicious candle that implies danger ahead. Danger because it is not only a Doji, but because of the length of the wicks.

This is the stuff of evening stars depending on the next day range and close. The good news is so far, the market is behaving nicely currently trading 1246.80 against a strong USD backdrop. The bad news is I ignored my own discipline and exited last night at approximately 2 am due to early weakness, the strong USD, and a paranoid feeling that China was going to do something nasty to  gold  indirectly by debasing its own currency. That was straight up paranoia, and a lesson to  be learned for all who care to  learn it. Straying from your  discipline only gives more  implicit permission to ignore it further.

Gold In Context

Global equities have stabilized after US equities recovered yesterday, with the NASDAQ 100 staging its biggest reversal in eight months and the S&P 500 recouped almost three percent to close 0.15% lower.  Asia Pacific equities were mostly higher.  Hong Kong shares, including the mainland shares that trade there, were the notable exception.  European shares are rebounding as well.  With every sector higher, the Dow Jones Stoxx 600 is up about 1.3%, which it sustained, would be the biggest gain since the end of October.  US stocks are trading heavier (~0.6%), but the employment data will be reported an hour before the market opens and is bound to change it.  Core bonds yields in Europe are slightly firmer, while peripheral yields are softer, left by a five basis point decline Italy’s benchmark yield to leave it nearly flat on the week.  The US dollar is slightly firmer against the major currencies, with the New Zealand dollar is resisting the pressure.  An announcement for OPEC+ is still awaited, leaving crude prices little changed.

Today’s  Data

The US and Canadian jobs data and Mexico’s CPI are the remaining data highlights for the week.  The ADP estimate disappointed yesterday but Fed Chair Powell’s comments late yesterday about the strength of the labor market suggest that any weakness will likely be shrugged off as noise.  Residual recovery from the hurricanes in September and October may help lift non-farm payrolls.  Given the focus on inflation, the focus has shifted from job growth to earnings growth.  The base effect is difficult as last November average hourly earnings rose 0.3%.  They have to rise 0.3% this November to maintain the 3.1% year-over-year pace.  Some economists are pinning their forecasts for an increase to Amazon and some other companies that increase wages on November 1.

The median forecasts call for Canada to have created 10k new jobs in November while wage growth for permanent workers may slow to 1.8% from 1.9%.  It peaked in May near 4%. Mexico’s is expected to report softer price pressures in November, with the CPI moderating to 4.6% from 4.9%.  Still, the central bank is widely expected to hike rates again (to 8.25%) when it meets again in two weeks.

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Have a Great Weekend



some data provided by:

Marc C. Chandler 
Chief Market Strategist
Bannockburn Global Forex, LLC