Market Summary on Dec 3


President Biden said yesterday his plans to fight Covid during the winter months doesn't include new lockdowns or expansion of vaccination requirements. This was positive and helped markets to get confidence back. Political decisions are important in the current environment and this statement is reassuring that the most negative outcome is very unlikely. However, it's still an emotional roller coaster. Since 5 new cases were identified in New York, the S&P500 futures moved lower. We will hear new cases appearing here and there but the government's plan not to impose restrictions is key news. 

Weekly unemployment claims came at 222k. It's a strong number pointing to tight conditions in the labor market. 

How to trade NFP today?
Today we have NFP report but the job report is not in the focus of the markets right now. The Fed's chair Powell said on Nov 30 that the pace of taper needs to be reviewed. The consensus for the headline number is +550k. A strong NFP above +800k can provide tailwind for the dollar, while a substantial miss like +200k can cause a short-term weakness of the dollar.  Don't forget to follow the unemployment rate (UR) which is expected at 4.5%.

Here are some trading ideas to consider:
1) If NFP comes above +800, buy USD
2) If NFP disappoints strongly and comes below +200K, look at UR. If UR improves, buy USD after the initial sell-off and expect a reversal. 
3) In other cases, the price action can be mixed.