USDJPY Retakes 113.00

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Market Drivers November 30, 2016
USDJPY back above 113.00
Markets wait for OPEC decision
Nikkei 0.01% Dax 0.18%
Oil $47/bbl
Gold $1189/oz.

Europe and Asia:
AUD Building Approvals -12.6% vs. 2.2%
EUR CPI flash esitmate 0.6% vs. 0.6%

North America:
USD Personal Income 8:30
USD Chicago PMI 9:45
USD Pending Home Sales 10:00

Dollar traded firmer in early European trade today rising against both yen and cable as the combination of month end flows and optimism about US economic activity drove the greenback higher.

USDJPY popped back above the 113.00 level as higher US yields helped to support the move. Today the markets will get a preview of the NFP release on Friday when ADP releases its monthly employment guage expected to come in at 161K versus 147K. In addition traders in North America will get to see the latest Personal Income and Spending figures which are expected to rise to 0.5% from 0.4% the month prior.

The growth in wages should prove supportive to the buck as it would bolster the case for further Fed tightening beyond the expected rate hike in December. Given the better than expected results in US GDP the markets are feeling more optimistic about US growth in general and are pushing USDJPY higher as the momentum rally continues. Any positive US data could send the pair towards the key test of 114.00 level which has been a key resist point since the start of this year.

Meanwhile in UK, cable dropped sharply below the 1.2450 mark on no news, as end of the month flows were cited. The pair continues to consolidate between 1.2300 and 1.2500 as markets attempt to gauge the next move in the Brexit saga. Over the past few days EU officials have ratcheted their rhetoric, stating that UK would have to give up its position as the financial center of Europe if it were to exit the union. UK officials as keen to maintain their predominance in finance since it is the primary driver of growth for the UK economy. For now cable remains subdued but volatility will return to the pair as the Brexit decision begins to take shape over the next several months.

With ADP the key focus for the market today, US data will play a prominent role in trade today, but the OPEC decision is sure to have an impact as well. Early indications from the meeting suggest that Russia may now be willing to entertain production cuts as well, which would boost any policy decision as well. Crude has risen more than 6% on the news and if an agreement is reached the market will target the $50/bbl mark which is sure to push USDCAD towards 1.3300 level as the day proceeds.

Boris Schlossberg
Managing Director

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