<p>We’re back to where we started.</p><p>US markets have completely erased the moves after the strong non-farm payrolls report. The S&P 500 is now down just 5 points to 4071 and on track for a weekly close above 200-day moving average for the first time since April. It’s an impressive performance.</p><p>More curious is the relentless bid in long-dated bonds. US 10s are down 3 bps to 3.49% from a high of 3.63%. US 30s are down 8 bps to 3.55% from a high of 3.70%.</p><p>One line of thinking is that bond market participants are trying to get ahead of ‚the next big trade‘ which is the weakening of the global economy and a fall in inflation. Whatever it is, the decline in yields is sapping the US dollar.</p>

This article was written by Adam Button at forexlive.com.

<p>The price of crude oil futures settled at $79.98. That is down -$1.24 or -1.53%. </p><ul><li>The OPEC+ meeting will take place virtually on Sunday. No change in production is expected.</li><li>The price cap looks to be set at $60 for Russian oil</li><li>The Russian sanctions will also go into effect cutting off all imports of Russian imports. Those will stop on Monday. </li></ul><p>So there are a lot of balls in the air that could have impact on supply. On the demand side, China and its Covid policy remains a wild card for global demand. </p><p>For the week, the price is up 4.79% from last Friday’s closing level. </p><p>Technically, looking at the hourly chart, the price low today tested the rising 100 hour MA at $79.85. The price dipped below that level but has rebounded back above. </p><p>Next week, a move below the 100 hour MA would have traders targeting the 200 hour MA at $79.05. On the topside, the close levels in play would be the 38.2% of the move down from the November high at $81.28 followed by the 50% midpoint at $83.66. </p>

This article was written by Greg Michalowski at forexlive.com.

<p>Bloomberg <a target=“_blank“ href=“https://www.bloomberg.com/news/articles/2022-12-02/bridgewater-erases-most-of-its-2022-gains-after-two-month-rout?leadSource=uverify%20wall“ target=“_blank“ rel=“nofollow“>reports </a>that the hedge fund founded by Ray Dalio — Bridgewater Associates — has mostly ruined what was shaping up to be the hedge fund best year in more than a decade.</p><p>The flagship Pure Alpha fund fell 13% in Oct-Nov to cut the year-to-date gains to 6%. The Pure Alpha II fund fell 20% in those two months to cut the YTD gain to 7.8%. </p><p>This year those are still very good gains compared to most hedge funds but that’s a big hit, especially with Kanye West posting this in his twitter flameout.</p>

This article was written by Adam Button at forexlive.com.

<p style=““ class=“text-align-justify“>At this point, we all know that labour market conditions are still fairly solid in the US. It’s been a while since the jobs report has been a key catalyst for market moves but amid the backdrop of slower inflation, this could be one where we see added volatility in the aftermath – that is if the numbers are softer.</p><p style=““ class=“text-align-justify“>In that sense, it will perhaps give more reason for the Fed to slow down the pace of rate hikes i.e. another coin in the Fed pivot piggy bank. Essentially, we’re still at the stage when <a target=“_blank“ href=“https://www.forexlive.com/news/when-bad-news-is-good-news-20220726/“ target=“_blank“ rel=“follow“>bad news is good news</a> for broader market sentiment. And that would bode ill for the dollar, especially since the technicals are looking rather poor for the greenback going into the report. Let’s take a look.</p><p style=““ class=“text-align-justify“>The push higher in EUR/USD this week sees the pair move to a five-month high, clearing its 200-day moving average and resistance just under 1.0500. The pair is little changed today but unless sellers can push price back below 1.0500 and preferably the 200-day moving average – now seen at 1.0365, buyers are still looking fairly poised to try and take a run at key trendline resistance (white line) near 1.0630.</p><p style=““ class=“text-align-justify“>Over to GBP/USD, the pair has broken above its 200-day moving average (blue line) and is trading above both its key daily moving averages for the first time since July last year. That’s a big signal that buyers are coming up for air and we are now meeting some minor resistance from the August highs at 1.2276-93. Beyond that, the 1.2500 mark is on the cards as the upside leg looks to exert itself further.</p><p style=““ class=“text-align-justify“>For sellers, they have much work to do in bringing the pair down back under the 200-day moving average – now seen at 1.2146 – to convince of a turnaround now.</p><p style=““ class=“text-align-justify“>USD/JPY is also one that is making waves today, with the pair down nearly 1% to just below 134.00 currently. The low earlier hit 133.64 as the downside pressure persists, but <a target=“_blank“ href=“https://www.forexlive.com/news/the-bond-market-remains-a-major-focus-point-towards-the-end-of-the-week-20221202/“ target=“_blank“ rel=“follow“>a lot will hinge on bond market developments</a> for the next move.</p><p style=““ class=“text-align-justify“>That said, sellers are now taking price below its 200-day moving average (blue line) of 134.49 and that is a big level to break as the pair last only traded below both key daily moving averages in January 2021. In other words, it’s a massive swing in momentum that could lend itself to further downside pressure.</p><p style=““ class=“text-align-justify“>Meanwhile, AUD/USD is also finding itself in a good spot after breaching resistance from the 61.8 Fib retracement level at 0.6767 this week. Buyers are continuing to keep the momentum as price now has room to extend towards its 200-day moving average (blue line) next at 0.6922.</p><p style=““ class=“text-align-justify“>For sellers, there is plenty of work to be done – first in bringing the pair back under the broken resistance this week at 0.6767 and then needing to solidify a downside push back under the 100-day moving average (red line) at 0.6686 to really convince of any reversal i nthe momentum.</p><p style=““ class=“text-align-justify“>NZD/USD is also another pair that is looking for a stronger breakout, after pushing back above its 200-day moving average (blue line) this week. The momentum is clearly siding with buyers now as they are targeting a push towards the August high at 0.6468.</p><p style=““ class=“text-align-justify“>For sellers, there is much work to be done as they need to claw their way back in bringing price towards the 200-day moving average – now seen at 0.6286.</p><p style=““ class=“text-align-justify“>Summary: As you can see from the charts, there is plenty of work to be done on the part of dollar bulls at the moment. There aren’t much levels to even lean on and the best they can hope for is some other catalyst to drive price action in their favour. However, it’s tough to imagine the US non-farm payrolls as being that considering that the risks to the report are skewed in favour of dollar sellers instead – coming off the back of stronger momentum with a softer US inflation report last month and then Fed chair Powell’s less hawkish remarks earlier this week.</p>

This article was written by Justin Low at forexlive.com.

<p style=““ class=“text-align-justify“>At the start of the week, month-end flows made it tough to read into the moves across markets. Bonds were bid in Europe before curiously falling in US trading but with that out of the way alongside Fed chair Powell’s less hawkish remarks, it was enough to push bonds higher (yields lower) over the past few sessions.</p><p style=““ class=“text-align-justify“>The size of the move is rather substantial with 2-year Treasury yields dropping further now to 4.20% – its lowest in two months. Adam posted some food for thought yesterday <a target=“_blank“ href=“https://www.forexlive.com/news/the-bond-market-is-sniffing-out-trouble-20221201/“ target=“_blank“ rel=“follow“>here</a>.</p><p style=““ class=“text-align-justify“>Meanwhile, we’ve seen 10-year Treasury yields slide towards 3.50% and that is nearing its 100-day moving average, seen at 3.48%:</p><p style=““ class=“text-align-justify“>In other words, there are big technical levels coming into play now for the bond market. If the rally continues to pick up after the US jobs report today, that will surely spell further trouble for the dollar – especially if 10-year yields crack below the key level above.</p><p style=““ class=“text-align-justify“>In turn, with USD/JPY already testing waters below its 200-day moving average as pointed out <a target=“_blank“ href=“https://www.forexlive.com/news/usdjpy-plunge-intensifies-drops-below-200-day-moving-average-20221202/“ target=“_blank“ rel=“follow“>here</a>, it could be a quick trip to 130.00 next if things align with the bond market.</p>

This article was written by Justin Low at forexlive.com.

<ul><li>Prior +1.6%</li><li>PPI +30.8% vs +31.5% y/y expected</li><li>Prior +41.9%</li></ul><p style=““ class=“text-align-justify“>Euro area producer prices fell more than expected in October and that is a welcome sign that perhaps inflation pressures may ease further in the months ahead. It marks the first time that producer prices have declined on a monthly basis since May 2020. Looking at the details, a 6.9% drop in energy price was the main drag for overall prices.</p>

This article was written by Justin Low at forexlive.com.

<p style=““ class=“text-align-justify“>That is the first time that the central bank has stepped in with ETF purchases since 17 June this year. For some context, Japanese stocks saw a poor showing today with the Topix falling by over 2% at one point, before closing down by roughly 1.6%.</p>

This article was written by Justin Low at forexlive.com.

<p style=““ class=“text-align-justify“>The dollar is finding little reprieve in European trading, even if the market mood is seemingly more tentative. <a target=“_blank“ href=“https://www.forexlive.com/terms/u/usd-jpy/“ target=“_blank“ id=“54ffc0de-9a7c-4a70-9e2e-73d5d9b2bfee_1″ class=“terms__main-term“>USD/JPY</a> has now fallen to fresh lows since mid-August as the pair drops below 134.00 as sellers threaten to take out the 200-day moving average (blue line), seen at 134.49.</p><p style=““ class=“text-align-justify“>That is a key level on the charts as a break below that paves the way for a potential push towards 130.00 next for the pair, with there being little support in the way.</p><p style=““ class=“text-align-justify“>The drop comes as we start to see Treasury yields inch towards the lows yesterday, with 10-year yields now seen at 3.517% – nearing its own 100-day moving average at 3.48%.</p>

This article was written by Justin Low at forexlive.com.

<p style=““ class=“text-align-justify“>A look at the dollar from the previous posts today:</p><ul><li><a target=“_blank“ href=“https://www.forexlive.com/news/christmas-carnage-for-the-dollar-20221201/“ target=“_blank“ rel=“follow“>Christmas carnage for the dollar?</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/usdjpy-stays-under-heavy-pressure-on-falling-yields-20221201/“ target=“_blank“ rel=“follow“>USD/JPY stays under heavy pressure on falling yields</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/eurusd-still-has-some-work-to-do-to-firmly-establish-next-upside-leg-20221201/“ target=“_blank“ rel=“follow“>EUR/USD still has some work to do to firmly establish next upside leg</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/audusd-looks-to-build-on-yesterdays-technical-break-higher-20221201/“ target=“_blank“ rel=“follow“>AUD/USD looks to build on yesterday’s technical break higher</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/gbpusd-inches-closer-towards-its-200-day-moving-average-as-buyers-seek-further-breakout-20221201/“ target=“_blank“ rel=“follow“>GBP/USD inches closer towards its 200-day moving average as buyers seek further breakout</a></li></ul><p style=““ class=“text-align-justify“>The levels above are still largely in play with the dollar keeping lower after yesterday’s drop. Besides a continued push higher in GBP/USD to 1.2150 currently on the session, other dollar pairs are holding on to gains since Asia trading for now.</p><p style=““ class=“text-align-justify“>This comes as European stocks are higher, playing catch up to the gains in Wall Street yesterday. However, US futures are more tepid with S&P 500 futures down 0.1% while Nasdaq futures and Dow futures are down 0.2%. Elsewhere, 10-year Treasury yields are keeping at the lows after yesterday’s plunge – sitting at 3.61% currently.</p><p style=““ class=“text-align-justify“>The lack of follow through in broader markets is at least not seeing things get worse for the dollar in European trading. The technicals outlined in the above posts is arguably a consideration but there’s also the fact that market players may be waiting on the US jobs report tomorrow before firming up their convictions.</p><p style=““ class=“text-align-justify“>For now, it looks like European traders are just biding their time and we’ll have to see what US traders have to offer later today.</p>

This article was written by Justin Low at forexlive.com.

<ul><li>Prior 6.6%</li></ul><p style=““ class=“text-align-justify“>A slight tick lower in the jobless rate as it reaffirms that labour market conditions are holding up. But amid some softer economic data from Europe in the past month, we have seen the PMI reports note a bit of a hit to employment conditions. That might be something that will translate to labour market data if things worsen going into next year.</p>

This article was written by Justin Low at forexlive.com.