London: Financial markets started the month on an uncertain footing after a dramatic November, with the dollar retreating from a nine-month high, Treasuries falling and European stocks snapping a two-day advance.
The US currency declined against most of its 16 major peers before a payrolls report on Friday, while a measure of euro volatility jumped to the highest since before the Brexit vote as investors brace for Italy’s referendum and Austria’s presidential election on 4 December and the European Central Bank’s policy decision in a week’s time. The slump in Treasuries extended the biggest climb in 10-year yields since 2009. European stocks fell with US equity-index futures, while oil advanced after a more than 9% rally on Wednesday.
Investors will be looking to non-farm payrolls data for more clues on the pace of interest-rate increases, after ADP Research Institute reported the biggest jump in private-sector workers since June. The surge in oil prices following OPEC’s agreement on Wednesday to cut output provides further support for so-called reflation trades after Donald Trump’s election as US president added to expectations for fiscal stimulus and Federal Reserve rate hikes.
“We are all waiting for the NFP on Friday, the referendum in Italy this weekend and the ECB next week,” Athanasios Vamvakidis, head of G-10 currency strategy at Bank of America Merrill Lynch, said in an email. “It’s consolidation ahead of key events.” Bloomberg