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Nonfarmpayrolls

Again macro conditions don't foretell a crash soonIn May and August I made posts saying "Macro conditions don't foretell a market crash soon." Time has passed and it's all pretty much the same. BUT!! Current world events might change everything. And see my other posts re likely imminent drops in the market. This post is just about macro. Once again, some points here looking back to 2001. (2020 was an irregular event). Sorry for all the colors here, but everything is connected. 1. The Fed Rate (FEDFUNDS dark purple) falls before unemployment rises and recession. Note that the market rose while the interest rate was at its peak in 2006-2007 and 2019. So a further interest rate rise in November shouldn't be a worry, not that it seems likely today looking at the CME Fedwatch Tool www.cmegroup.com 2. There are still more job openings than people to fill them (JTSJOL Non-Farm Job Openings minus USCJC US Continuing Jobless Claims - dark blue). Still unchanged since May. 3. Unemployment Rate (UNRATE dark gray) rises before SPX (yellow) drops. Currently UNRATE is up to 3.8% and unchanged August-September. Relatively static and close to multi-year lows. 4. Note that since May: * Initial Jobless Claims (USIJC light blue at the bottom) have dropped * Continuing Jobless Claims (USCJC light gray) are unchanged * Non-farm Payrolls (USNFP green) are unchanged * Job openings (JTSJOL light purple) fell slightly and rose back to the May level. At over 9m there are more available jobs that any time pre-COVID. * The number of Employed Persons (USEMP light pink) is rising continuously and is now at 161.5m - almost 3m more that pre-COVID. There's your economic growth. 5. After a year in decline, M2 Money Supply rose during the summer but might now be falling - a negative indicator? 6. The SPX drop last year was a result of inflation -> rate rises -> fear. But the recession didn't happen and the economy still looks strong Conclusion is that macro conditions still don't foretell a market crash in the immediate future. NOT TRADING ADVICE. DO YOUR OWN RESEARCH.
FRED:JTSJOL
by lavoriamo
EUR/USD steady after Mfg. PMIs, US NFP loomsThe euro is flat on Friday, after sustaining sharp losses a day earlier. In the European session, EUR/USD is trading at 1.0844. There wasn't much to cheer about after today's Manufacturing PMI reports for Germany and the eurozone. Although both PMIs improved slightly in August, business activity continues to decline in the manufacturing sector. The Eurozone PMI came in at 43.5 in August, up from 42.7 in July and just shy of the consensus estimate of 43.7. In Germany, manufacturing is in even worse shape - the August reading improved from 38.8 to 39.1, matching the consensus. Manufacturing is in deep trouble in the eurozone and in Germany, the largest economy in the bloc. The PMIs point to a constant string of declines since June 2022. The volume of new orders is down and exports, already struggling in a weak global environment, have been hit by the slowdown in China which has reduced demand. Germany's weak manufacturing data is particularly disturbing. Once a global powerhouse, Germany has seen economic growth slide and is officially in a recession, with two consecutive quarters of negative growth in the fourth quarter of 2022 and the first quarter in 2023. In the US, the nonfarm payroll report is expected to decline slightly to 170,000, compared to 187,000 in the previous reading. If nonfarm payrolls are within expectations, it will mark the third straight month of gains below 200,000, a clear signal that the US labour market is cooling down. A soft nonfarm payrolls report would cement an expected pause by the Federal Reserve next week and also bolster the case for the Fed to hold rates for the next few months and possibly into 2024. EUR/USD is tested support at 1.0831 earlier. Below, there is support at 1.0731 1.0896 and 1.0996 are the next resistance lines
by OANDA
NFP Alert: Gold to rise on weak numbers? Focus is growing on the upcoming nonfarm payrolls (NFP) report. In August, it's expected that there will be about 170,000 new jobs (compared to 187,000 in July). The days leading up to this report have had some not-so-great job-related data, like the JOLTS and ADP reports. This has heightened expectations that the NFP might show fewer jobs than expected. The US dollar and Gold may feel the immediate effects if job growth disappoints, as signs that the economy is slowing could force the Fed to adopt a more cautious stance at upcoming meetings. Just yesterday, the ADP report for private payrolls in August was lower than what experts predicted. It was 177,000 jobs instead of the expected 195,000. If the NFP shows more than 200,000 new jobs, there could be a higher risk of inflation. This could help the US dollar but might place pressure on gold prices. On the other hand, if the NFP has less than 150,000 new jobs, traders might change their thinking about the Fed monetary policy outlook. This could make the US dollar weaker but could be a boost for gold prices. Gold recently peaked just below $1950, so this would be the immediate upside target, followed by last month's peaks at $1954, $1963, and $1972.
BLACKBULL:XAUUSD
by BlackBull_Markets
1
EURUSD Key levels pivotal as NFP nears The 4-hour chart on the EUR/USD displays a possible bearish bias, but there are some indications of consolidation after the small rebound observed on Friday. At present, the price is lingering around the 20-day Simple Moving Average (SMA). To improve its bullish outlook, it would be necessary for the Euro to hit 1.0840 and for other technical indicators (that have shifted away from their bearish inclination) to remain in its favor. The attention is now directed towards upcoming employment and inflation data. The JOLTS Job Openings report is scheduled for release on Tuesday, followed by the ADP survey on private job creation, in anticipation of the Nonfarm Payrolls report to be unveiled on Friday. In the realm of European data, emphasis is also placed on inflation reports. Commencing Wednesday, Eurozone nations will commence the release of preliminary August Consumer Price Index (CPI) data. Additionally, on Tuesday, the German Gfk Consumer Confidence survey is set to be published. If there is a weekly closure in proximity to the current levels after the US jobs reports, it might embolden sellers in the next week, potentially opening the price zone around 1.0733. In the meantime, resistance could potentially be encountered at levels 1.0840 and 1.0910.
by BlackBull_Markets
🛎Mastering Key Forex Fundamentals🛎 ♦️Navigating the world of forex trading can be both thrilling and challenging. While it may seem overwhelming to keep track of all the complex factors that affect currency movements, some key fundamentals can significantly impact forex markets. In this article, we will discuss three essential forex fundamentals: non-farm payrolls, interest rates, and central bank policies, offering you a straightforward understanding of their significance and effects. ♦️Non-farm Payrolls: One of the most influential economic indicators in forex trading is the non-farm payrolls (NFP) report. Published monthly by the U.S. Bureau of Labor Statistics, the NFP report reveals the number of jobs added or lost (excluding the farming sector) in the United States during the previous month. ▪️Why it matters: The NFP report provides traders valuable insights into the strength of the U.S. economy. A higher-than-expected NFP figure indicates an expanding job market, economic growth, and potential currency strength. Conversely, if the NFP data disappoints, it suggests a weaker economy and can lead to currency depreciation. ♦️Interest Rates: Interest rates play a crucial role in forex trading. They reflect the cost of borrowing in a particular country and influence investor behavior and currency values. ▪️Why it matters: Changes in interest rates impact currency demand. When a central bank hikes interest rates, it attracts foreign investors seeking higher returns, leading to increased demand for the currency and potentially strengthening its value. Conversely, when rates are lowered, it may spur borrowing and economic growth, but can also result in currency devaluation due to decreased attractiveness for investors. ♦️Central Bank Policies: Central banks are instrumental in forex markets due to the control they exert over monetary policies. ▪️Why it matters: By adjusting interest rates, implementing quantitative easing measures, or intervening in currency markets, central banks can directly influence their nation's currency value. Statements and speeches made by central bank officials can provide insight into their future monetary policy decisions, guiding forex traders' expectations. ♦️To master forex trading, a solid understanding of key fundamentals is essential. Factors such as non-farm payrolls, interest rates, and central bank policies carry significant weight and can lead to substantial currency movements. Familiarize yourself with economic indicators, monitor central bank actions and announcements, and always exercise caution and risk management when trading forex. ♦️Remember, successful trading requires continuous education, practice, and experience. Stay informed, adapt your strategies accordingly, and remain patient as you navigate the dynamic and exciting world of forex trading. 😸Thank you for reading buddy, hope you learned something new today😸 Do you like this post? Do you want more articles like that?
Education
by ProSignalsFx
10
Canadian dollar on a roll ahead of US and Canada job reportsThe Canadian dollar is drifting in the European session, trading at 1.3378. It has been a good week for the Canadian currency, which is up about 1% against its US cousin. We can expect some significant movement from USD/CAD in the North American session, as both Canada and the US release the June employment reports. The US labour market has been surprisingly resilient in the wake of relentless tightening by the Fed. After 500 basis points of hikes, the labour market remains strong and has been a driver of inflation, interfering with the Fed's efforts to curb inflation. The ADP employment report usually doesn't get much attention, as it is not considered a reliable precursor to nonfarm payrolls, which follows a day or two after the ADP release. The June ADP reading was an exception, as the massive upturn couldn't be ignored. ADP showed a gain of some 497,000 new jobs, crushing the consensus estimate of 267,000 and the May reading of 228,000. The nonfarm payrolls report is expected to ease to 225,000 in June, down from 339,000 in May, but investors are nervous that nonfarm payrolls could follow the ADP release and head higher. If nonfarm payrolls defies the consensus estimate and climbs higher, the US dollar should respond with gains. The Fed, which is very much hoping that the labour market weakens, would be forced to consider more tightening than it had anticipated. The money markets are widely expecting a rate hike on July 27th but have priced in a September pause at 67%, according to the CME FedWatch tool. If nonfarm payrolls jump higher, all bets are off and I would expect the probability of a September pause to fall. Canada releases the June report later on Friday, which is usually overshadowed by US nonfarm payrolls. As in the US, the Canadian labour market has been strong - the economy added jobs for nine consecutive months until the May report. Canada is expected to add 20,000 new jobs in June, while the unemployment rate is projected to inch higher to 5.3% in June, up from 5.2% in May. USD/CAD is testing resistance at 1.3318. Next, there is resistance at 1.3386 1.3217 and 1.3149 are providing support
by OANDA
USD/JPY gains ground, Fed minutes show policy divisionsThe Japanese yen is showing strong gains on Thursday. In the European session, USD/JPY is trading at 143.82, down 0.57%. The Federal Reserve has been aggressively tightening rates in order to curb inflation but took a pause in June after ten consecutive hikes. At the meeting, the Fed said that a pause would provide members with time to assess the impact of the hikes, which have amounted to some 500 basis points. The minutes of the June meeting were significant in highlighting that Fed members were in disagreement about the decision to pause rates. The decision to pause may have been unanimous, but the minutes made it clear that there was a difference of opinions, with some members preferring a hike but reluctantly agreeing to a pause. There was also disagreement over the pace of tightening in the second half of the year, with 16 of 18 members expecting at least one hike and 12 members expecting two or more hikes. After the minutes, the money markets slightly raised the probability of a 0.25% hike in July from 86% to 91%, according to the CME FedWatch tool. The pricing could continue to change, with two key reports ahead of the July meeting. The non-farm payrolls report will be released on Friday. Job growth is expected to have cooled to 225,000 in June, down sharply from 339,000 in May. This will be followed by the June inflation report next week, with headline inflation expected to fall from 4.0% to around 3.0%. Japan releases Household Spending and Average Cash Earnings on Friday. Household Spending declined by 4.4% in April and another decline of 2.4% is expected for May, as inflation has dampened consumer spending. Average Cash Earnings gained 1% in May and the consensus for June stands at 0.7%. There is resistance at 145.28 and 146.23 144.11 is a weak support level. The next support line is 143.16
by OANDA
Swiss franc higher as markets eye US jobs reportThe Swiss franc has moved higher on Thursday and is trading at 0.9068  in the North American session, down 0.41%. On Wednesday, the Swiss franc fell as low as 0.9147, its lowest level in two months. The Swiss National Bank meets on June 22nd and SNB President Jordan had a warning today for the markets. Jordan said that the central bank would not allow inflation to become entrenched, adding that if core inflation remained above 2% for too long, it would be difficult to bring it back down below 2%. Inflation remains above the Bank's 0-2% target, and Jordan has repeatedly warned that the Bank could continue tightening rates to curb inflation. The Bank is expected to raise rates by 25 basis points at the June meeting, which would bring the cash rate to 1.75%. The Federal Reserve meets on June 14th and members appear divided as to what action the Fed will take. Fed member Mester supports another rate hike and said on Wednesday that she did not see a “compelling reason to pause”, saying there was a more compelling case to 'hike and hold' rates. On the opposite side, members Jefferson and Harker said on Wednesday that they supported a pause in June and making future rate decisions based on the data. Jefferson warned that the effects of tightening had not been fully processed by the economy and higher rates could increase stress on the banking sector. The markets had widely expected a rate pause just a few weeks ago, but have now priced in a 25-basis point hike at 67%. US economic data has been solid, making it more difficult for the Fed to take a pause. Unless Friday's nonfarm payrolls are woefully below the forecast, it's looking likely that the Fed will be forced to hike again in June. The US House of Representatives has approved the debt ceiling deal by a resounding vote of 314-117. The Senate will have to quickly vote on the bill, as the government could reach its spending limit as early as June 5. The debt ceiling crisis sapped risk appetite and has helped the US dollar post broad gains against the majors. Fed member Loretta said that the deal removes a “big piece of uncertainty” about the economy. The US dollar has posted strong gains against the majors due to the debt crisis ceiling, which sapped risk sentiment. Once the debt ceiling is out of the way, it will be interesting to see if the US dollar loses some steam. USD/CHF is testing support at 0.9103. Below, there is support at 0.9022 0.9156 and 0.9237 are the next resistance lines
by OANDA
USD/JPY jumps after solid nonfarm payrolls releaseUSD/JPY has posted gains in the North American session after a solid showing from US nonfarm payrolls. Japan's real wages continued to fall, while household spending rebounded. In the North American session, USD/JPY is trading at 132.24, up 0.36% on the day. In the US, nonfarm payrolls was within expectations, easing concerns that the US labour market is in trouble. The economy added 236,000 in March, close to the market consensus of 240,000. This was a solid reading, although weaker than the February reading of 311,000. The US dollar posted gains against the majors after the release, after concerns that a soft reading might force the Fed to take a pause in its rate hikes. Japan's real wages fell in February for the 11th straight month, falling by 2.6%. Household purchasing power continues to drop, but this was an improvement over the -4.6% release in January, as government energy subsidies helped curb inflation. Household spending rose 1.6% in February, rebounding from -0.3% in January but well off the market consensus of 4.3%. The Bank of Japan doesn't meet until April 28th, but Governor Ueda will be under the magnifying glass, as he chairs his first meeting at the helm of the central bank. The economy is showing signs of improvement, with retail sales and industrial production accelerating in February. Inflation remains very low compared to other major economies but is still high for Japan. In February, CPI fell to 3.3%, down from 4.3% in January but above the BoJ target of 2%. There has been considerable speculation that Ueda could shift policy and tweak or even abandon the Bank's yield curve control policy. This move could have huge significance for the yen - when the BoJ widened the yield target band in December, the yen posted sharp gains. Ueda hasn't revealed any cards about what he might do at his first meeting. He has toed the line of the previous Governor, Haruhiko Kuroda, that the BoJ won't tighten until inflation is sustainable, and that would require higher wage growth. Wage growth has been falling, so any tightening moves such as raising interest rates do not appear imminent. USD/JPY is testing resistance at 132.27. Above, there is resistance at 133.45 130.94 and 129.09 are providing support
by OANDA
USD/CAD shrugs despite strong Canadian job numbersIt could be a busy day for the US dollar, with the release of nonfarm payrolls later today. Canada posted a strong employment report on Thursday, as employment change and unemployment were better than expected. In the European session, USD/CAD is trading at 1.3501, up 0.07%. All eyes are on US nonfarm payrolls, with a consensus estimate of 240,000 for March, following a reading of 311,000 thousand in February. This week's employment releases have been weaker than expected, raising concerns that the robust US labour market is starting to slip. JOLTS Jobs Openings and ADP Employment Change and unemployment claims all missed expectations, and last week's unemployment claims reading was revised sharply upwards. Will nonfarm payrolls follow the pattern and disappoint? If so, we could see a strong reaction from the markets, and the US dollar could lose ground due to speculation that the Fed might have to take a pause. The Fed has been able to relentlessly raise rates in large part due to the tight labour market, and if job creation shows cracks, it will be difficult for Fed policy makers to justify another rate hike at the May meeting. Canada released its March employment report on Thursday, and the numbers were solid. The economy added 34,700 jobs, crushing the consensus estimate of 7,500 and above the February reading of 21,800. Unemployment was unchanged at 5.0%, a drop below the forecast of 5.1%. Wage growth eased, however, slowing from 5.4% to 5.2%. The Ivey PMI also pointed to strong growth, climbing to 58.2 in March, up sharply from 51.6 prior and above the consensus estimate of 56.1 points. The labour market remains surprisingly resilient, even with the Bank of Canada's aggressive rate-tightening cycle. The Bank of Canada paused rates in March, for the first time since the current cycle started in March 2022. Governor Macklem has said that future rate decisions will depend on the data. The BoC meets on April 12th and will have to decide if the economy has cooled enough to warrant another pause. USD/CAD faces resistance at 1.3590 and 1.3673 1.3436 and 1.3353 are providing support
by OANDA
GOLD → NFP data release. Price decline to support Gold is down to support before the release of the non-farm payrolls data. Earlier the price hit a new high at 2032, after which a technical pullback to the support of the price channel is forming. What to expect from the price today? The forex market may be slow today as many countries meet "Good Friday" but also, we have the NFP data release today. The forecast is for job cuts, so if the actual numbers are confirmed, the dollar could weaken a bit, which would affect the forex market. Key support: 2000 (false-break or rebound strategy), 1990 The key resistance: 2012 (false-break) 2025 (breakout) I think that the release of the actually underreported data might have a positive effect on the gold price and we will see a bounce of the price from the uptrend channel support, but I do not expect much of a market reaction, as a large part of the market is down today. Regards, R. Linda!
OANDA:XAUUSDLong
by RLinda
17
NZD/USD in holding pattern ahead of Reserve Bank decisionThe New Zealand dollar is almost unchanged ahead of the Reserve Bank of New Zealand (RBNZ) rate decision on Wednesday (New Zealand time). The US releases JOLTS Job Openings. NZD/USD is trading quietly at the 0.63 line in the European session. The RBNZ is widely expected to raise rates by 25 basis points, which would bring the benchmark cash rate to 5.0%. Over the past year, the RBNZ has delivered oversize hikes of 50 and even 75 basis points, marking an aggressive rate-tightening cycle in order to contain red-hot inflation. The battle with inflation has been slow, as CPI came in at 7.2% in Q4 2022, unchanged from the third quarter. The sharp rise in rates and weak global demand have battered the New Zealand economy. GDP declined by 0.6% in Q4 2022, and the cyclone in February will have a negative impact on GDP for Q1. This backdrop supports the RBNZ taking a break from its relentless rate hikes at the upcoming meeting. In February, the RBNZ projected a terminal rate of 5.50%, but with the economy showing signs of strain, the central bank might end the current cycle at 5.25%, especially if inflation heads south. We could even see a rate cut before the end of the year. In the US, the highlight of the week is nonfarm payrolls on Friday. After a better-than-expected reading of 311,000 in March, the consensus estimate stands at 240,000 which is still decent. The Fed will be looking at nonfarm payrolls as an important factor in its rate decision in May. Currently, the odds of a 25bp increase are at 59% and a pause at 39%, according to the CME Group. This week's employment releases kick off with JOLTS Job Openings later today. The estimate stands at 10.49 million, following the prior reading of 10.82 million. NZD/USD tested resistance at 0.6310 earlier in the day. Above, there is resistance at 0.6362 0.6245 and 0.6127 are providing support
by OANDA
USD/JPY - yen slips after BoJ maintains policy settings The Japanese yen is trading at 1.36.83 in the European session, down 0.52%. USD/JPY fell 0.90% on Thursday but has recovered much of those losses today. Bank of Japan Governor Kuroda didn't fire any final shots at his final meeting today. The BoJ maintained interest rates at -0.1%, where they have been pegged since 2016, and didn't make any changes to its to yield curve control (YCC) policy. Traditionally, BoJ governors do not make waves at their final meeting, but there was an outside chance that Kuroda might buck the trend. Kuroda has surprised the markets in the past, most notably when he widened the yield curve band in December and jolted the markets. This time, Kuroda stayed on the sidelines and the yen responded with losses as some investors were disappointed that he didn't tweak the YCC. Kazuo Ueda takes over as BoJ Governor next month, and there is growing speculation that Ueda will change forward guidance and tweak or even abandon YCC, as distortions in the yield curve are damaging the bond markets. Ueda may not press the trigger when he chairs his first meeting in April but is expected to shift policy in the coming months. The US releases its February employment report, highlighted by nonfarm payrolls, later today. The blowout January reading of 517,000 is widely seen as a blip, although the labour market remains surprisingly resilient, despite the bite of rising interest rates. The estimate for February stands at 205,000 and a wide miss of this figure on either side will likely shake up the US dollar.  A weak reading would fuel speculation of a Fed pivot and likely weigh on the US dollar, while a strong figure would support the Fed's hawkish stance and should be bullish for the greenback. The Fed will also be keeping a close eye on wage growth, in addition to nonfarm payrolls. Average hourly earnings are expected to rise to 4.7% y/y in February, up from 4.4% y/y in January. Higher wages drive inflation higher and an acceleration in wage growth would complicate the Fed's battle to curb inflation. 136.06 is under pressure in support. 13502 is next 136.86 and 1.37.90 are the next resistance lines
by OANDA
Canadian dollar eyes Ivey PMIThe Canadian dollar is coming off a relatively quiet week but that could change as there a host of key releases this week. Ivey PMI kicks things off later today, followed by the Bank of Canada rate decision on Wednesday and the February employment report on Friday. Canada's Ivey PMI recorded a massive rebound in January, climbing from 33.4 all the way to 60.1 points. A reading above 50.0 points to expansion. The reading is expected to remain strong in February, with an estimate of 57.7 points. Canada's economy ended 2022 in an unimpressive fashion, posting a growth rate of 0.0% y/y in the fourth quarter, compared to 2.3% in Q3. This was much lower than the market estimate of 1.5% and the Bank of Canada's projection of 1.3%. On a monthly basis, December GDP contracted by 0.1%, down from 0.0% in November and below the estimate of 0.0%. The Bank of Canada meets on Tuesday and is widely expected to hold rates at 4.50%. A non-move would be significant, as the BoC hasn't taken a pause since the current rate-tightening cycle began in January 2023. Governor Macklem has signalled to the markets that he wants to take a pause in tightening, and the weak GDP report will support the BoC easing off the rate pedal as the economy shows signs of slowing. The steep hike in rates has pushed inflation lower, as it fell to 5.9% in January, down from 6.3% a month earlier. What will the BoC do after tomorrow's rate decision? The BoC would love to pause rates throughout the year, but Macklem has made clear that a pause is dependent on supportive data. There is also the complication that the Federal Reserve is likely to continue hiking several more times this year, and the BoC does not want to fall too far out of sync with rate levels in the US. In the US, this week's key events are Fed Chair Powell's semi-annual testimony before Congress and the nonfarm payroll report, both of which could move the US dollar. If Powell provides any hints about further rate hikes, the US dollar could respond with gains. Nonfarm payrolls was red-hot in January with 517,000 new jobs, but this is expected to be a one-time bump, with the estimate for February standing at 200,000. The surprisingly resilient labour market has the Fed concerned about wage pressures, and a strong wage growth release could raise market expectations of higher rates. 1.3701 and 1.3784 are the next resistance lines 1.3571 is a weak support line, followed by 1.3478
by OANDA
EUR/USD extends lossesThe euro continues to lose ground and has started the week in negative territory. In the European session, EUR/USD is trading at 1.0783, down 0.19%. Earlier in the day, the euro has now fallen to its lowest level since Jan. 23. The euro sent market participants on a roller-coaster ride last week. The Fed's rate increase pushed the euro higher by 1.16%, but the ECB rate hike and the blowout US nonfarm payroll report sent the euro tumbling close to 2%. The January US nonfarm payrolls was an absolute blowout that surprised everybody. The economy created 517,000 new jobs, crushing the estimate of 185,000 and well above the December gain of 260,000. The unemployment rate fell from 3.5% to 3.4%, its lowest rate since 1969. The US dollar surged against most of the major currencies after the employment report and the euro fell by 1%. There has been talk that the Fed might deliver a "one and done" rate hike in March which would end the current rate-hike cycle, even though Jerome Powell said at last week's FOMC meeting that two more rate hikes were likely. After the massive gain in nonfarm payrolls, the "one and done" proponents will be lying low. How will the Fed react to the job data? The labour market, which has shown remarkable resilience to the Fed's steep rate-tightening cycle, is much too strong for the Fed's liking, as a weaker labour market is needed for inflation to continue falling. Fed member Mary Daly called the employment release a "wow number" and said that the Fed's December forecast of a peak rate of 5.1% was a "good indicator" of Fed policy. With the benchmark rate currently at 4.5%-4.75%, we're likely looking at two more rate hikes, exactly what Jerome Powell said at the FOMC meeting last week. Since the employment report, the markets have become less dovish and have priced in an increase in May. Eurozone data was a mixed bag today. German factory orders bounced back in December with a gain of 3.2% m/m, after a 4.4% decline in November. The estimate stood at 2.0%. Eurozone Sentix Investor Confidence improved to -8.0, up from -17.5 points. However, eurozone retail sales slid 2.7% m/m in January, down from a 1.2% gain in December and worse than the consensus of -2.5%. 1.0758 is a weak support line, followed by 1.0633 There is resistance at 1.0873 and 1.0954
by OANDA
Big moment for markets: NFP/Services preview Following Powell's flip in script, the market is asymmetric around NFP. A strong number may not budge the doves while an indication of softness will reinforce it - however ... Keep eye on the ISM services report as well as this saw a stark miss in December (49.6 vs 55.0 estimated). Another poor miss could sew the seeds of a hard landing in the US, forcing a sell-off in risk and supporting the US Dollar, especially if jobs are soft. Looking at the charts, a bearish thesis risk is in play and a stronger US Dollar would be my preferred and easiest trade across FX, Gold and the DoW.
PEPPERSTONE:US30
by Ross-J-Burland
GBP/USD sliding after dovish BoE hikeThe British pound has posted sharp losses on Thursday and continues to lose ground in the North American session. GBP/USD is trading at 1.2251, down 0.98%. The major central banks remain the focus of the market's attention. The Bank of England raised rates by 50 basis points, just one day after the Federal Reserve's 25-bp hike. This marked a second straight increase of 50 bp, bringing the cash rate to 4%. As with the Fed decision, the hike was expected, but investors found plenty to cheer about, resulting in the pound reversing course and losing ground. Governor Bailey said in a follow-up news conference that inflation pressures remained and inflation risks were skewed to the upside. Still, investors found plenty of reasons to be optimistic. Bailey said that inflation had turned a corner and noted that members had removed the word "forcefully" from its forward guidance statement. The BoE is now projecting that inflation will fall to around 4% by the end of the year and that the recession will be shallower than it had anticipated. The less pessimistic outlook for inflation and the economy sent risk appetite higher and pushed the pound lower. The markets were in a good mood after the decision, but there are plenty of problems ahead - inflation is above 10% and some half a million workers went on strike on Wednesday. The Fed raised rates by 25 basis points as was widely expected. The Fed noted that inflation has eased but reminded listeners that it remained much higher than the 2% target. Jerome Powell signaled that more rate hikes are coming and said he did not expect to cut rates this year. This was essentially a repeat of the hawkish message we've heard before, but the markets chose to focus on Powell saying that the disinflation process had started and that he expected another couple of rate hikes before winding up the current rate-hike cycle. This sent the US dollar broadly lower on Wednesday. Besides inflation, the Fed is focused on employment data, which will make Friday's nonfarm employment report a key factor in future rate policy. In December, nonfarm payrolls fell from 256,000 to 223,000 and the downturn is expected to continue, with an estimate of 190,000 for January. This release could result in further volatility in the currency markets on Friday. .
by OANDA
USD/JPY eyes inflation, household dataThe Japanese yen is calm on Monday and is trading slightly higher, at 132.27. The yen ended the week on a strong note, posting gains of about 1% on Friday. USD/JPY has shown significant volatility since late December. Last week, the pair traded in a range of over 500 points, which included breaking below the 130 line for the first time since May. We could see stronger movement again today, as Japan releases Tokyo Core CPI and Household Spending later in the day. Tokyo Core CPI has been moving steadily higher since January 2022, when it came it a negligible 0.2%. The December report rose to 3.6%, up from 3.4%, and the upward trend is expected to continue, with a forecast of 3.8% for January. After years of deflation, rising prices have become the new norm. The Bank of Japan has repeatedly stated that it will not change its ultra-loose policy due to higher inflation. Governor Kuroda said last month that he expects inflation to fall below the 2% target as the effect of soaring import costs will ease. The BOJ shocked the markets in December by widening the yield curve band, and there is speculation that Kuroda's successor, who will take over in April, could raise the yield targets on long-term bonds, which would be a major policy change. High inflation has taken a bite out of Household Spending, which fell to 1.2% in October, down from 2.3% a month earlier. The downtrend is expected to continue, with a weak gain of 0.6% expected for November. The US dollar was lower across the board on Friday, after the US posted some soft data. Nonfarm payrolls was slightly better than expected at 223,000, but wage growth headed lower. Average hourly earnings rose 4.6%, well off the 5.0% estimate and shy of the prior reading of 4.8%. The ISM Services PMI underperformed, slipping to 49.6, down sharply from 56.5 and the forecast of 55.5. This marked the first time the PMI has fallen into contraction territory since May 2020, with a reading below the neutral 50.0 threshold. The drop in wages and the weak services data indicate that the US economy is slowing and is likely to tip into recession, which could force the Fed to reconsider its aggressive rate-tightening policy. There is weak support at 132.13, followed by 131.14 133.28 and 134.75 are the next resistance lines
by OANDA
Nonfarm Payrolls Effect on Gold PriceOANDA:XAUUSD Key Economics Highlight in the first week of 2023 - Nonfarm Payrolls and Unemployment Rate for December 2022 were reported on 6th January 2023. - Nonfarm payrolls increased by 223,000 which is higher than what the market was expecting by 200,000. - The unemployment rate fell to 3.5%, which was lower than the consensus of 3.7%. On the night of January 6, 2023, this report had a significant positive impact on various financial assets especially Gold. Gold prices rose from 1,836 USD to 1,850 USD within 10 minutes of the reporting and it made a higher high on the weekly candle at 1,869.9 USD before closing the week at 1,866.1 USD Technically, Gold price almost reach its significant supply zone at around 1876.5 USD. Therefore, it would not be surprising to see the gold price drops to the first support level or trade in the range of 1825 - 1876 for a while. Fundamentally, the current US workforce participation rate still has not reached the Pre-Covid19 level and the contribution of workforce participation in US consists more aging population which could be problematic for future economy growth as there could be more labor demand but less supply since more people are going into being retired. Therefore, it seems like the market has overreacted to this report in short term. But, speculators and investors must still continue to manage their risks based on the inflation rates and potential recession of US economy Let us know what you guys think!~
OANDA:XAUUSD
by ChartTrail
USD/JPY eyes US nonfarm payrollsUSD/JPY has been hovering close to the 145 line most of the week, and the trend has continued today. In the European session, USD/JPY is trading at 144.81, down 0.21%. The US releases nonfarm payrolls later today. The release once received massive coverage and was usually a market-move, but the new era of high inflation and global tightening has stolen much of NFP's thunder. Still, the indicator is an important bellwether of the health of the US economy and could provide insights into future rate moves from the Federal Reserve. The consensus for the September nonfarm payrolls stands at 250,000, lower than the 315,000 recorded in August. The US labour market has been very robust, and investor reaction will likely be muted if the consensus is not wide of the mark. The markets will be more focussed on hourly earnings and the participation rate - soft readings would raise speculation that the Fed could ease up sooner rather than later, which would be bearish for the US dollar. Conversely, hot readings would support the Fed remaining hawkish, which would give the US dollar a boost. Japan will also be keeping a close eye on today's US jobs reports. The Ministry of Finance (MOF) has shown that is willing to intervene to prop up the Japanese yen, and a stronger-than-expected NFP could be the trigger for another round of intervention. Since the dramatic intervention on September 22nd, the yen has moved only slightly above the 145 level, which could well be a 'line in the sand' for the MOF.  The MOF intervention, which was meant as a warning against speculators, likely cost 2.84 trillion yen. The move led to Japan's foreign currency reserves falling to their lowest level since 2017. With the Bank of Japan capping JGB yields and the Fed continuing to deliver oversize rate hikes, the US/Japan rate differential is widening, which means the yen will likely continue to lose ground, barring another currency intervention by the MOF. There is resistance at 145.36 and 145.97 USD/JPY has support at 144.29 and 143.68
by OANDA
1
Euro rebounds after sharp losses, NFP nextThe euro is in positive territory today after taking a nasty spill on Thursday. In the European session, EUR/USD is trading at 0.9984, up 0.40%. Thursday was a day to file away and move on for the euro, as EUR/USD tumbled 1.07%. The euro is under pressure from a high-flying US dollar and is having trouble staying above the symbolic parity line. A combination of solid US numbers, weak eurozone data and lower risk sentiment sent the euro sharply lower. German Manufacturing PMI dipped to 49.1, down from 49.3 in July. This marked a second straight contraction, and was the lowest level since May 2020, at the start of the Covid pandemic. It was a similar story for the eurozone Manufacturing PMI, which dropped from 49.8 to 49.6, a 26-month low. The manufacturing sector continues to struggle with supply chain disruptions and a shortage of workers, and high inflation and an uncertain economic outlook are only exacerbating matters. In the US, the ISM Manufacturing PMI held steady at 52.8, showing modest expansion. The labour market remains strong, with initial jobless claims dropping to 232 thousand, down from 237 thousand a week earlier and much better than the consensus of 248 thousand. Adding to the euro's woes is the uncertainty over European energy supplies from Russia. Russia has shut down Nord Stream 1 pipeline for three days for maintenance, but Germany has charged that the shutdown is politically motivated and that the pipeline is "fully operational". Nord Stream is supposed to come back online on Saturday. Even if Moscow does restore service, this episode is a reminder of Europe's energy dependence on an unreliable Russia. Germany has greatly reduced its dependence on Russian gas, from 55% in February to just 26%, but a cutoff from Moscow would result in a shortage this winter. The week wraps up with the August nonfarm payrolls report. The consensus is for a strong gain of 300 thousand, after the unexpected massive gain of 528 thousand in July. The report could well be a market-mover for the US dollar. The markets are finally listening to the Fed's hawkish message, and a strong reading will raise expectations of a 0.75% hike in September and likely push the dollar higher. Conversely, a weak report would complicate the Fed's plans and raise the likelihood of a 0.50% hike, which could result in the dollar losing ground after the NFP release. EUR/USD is testing resistance at 0.9985. Above, there is resistance at 1.0068 There is support at 0.9880 and 0.9797
by OANDA
USD/JPY stabilizes after hitting 139The Japanese yen is in positive territory today after starting the week with sharp losses. USD/JPY is trading at 138.22, down 0.34%. Japan releases a host of events on Wednesday, including retail sales and consumer confidence. Retail sales for July is expected to come in at -0.5% MoM, following a 1.4% decline in June. Consumer confidence remains weak, with a July estimate of 31.0, following the June read of 30.2. Japanese consumers are in a sour mood and nervous about the economy, and it's no surprise that they are holding tight to the purse strings as inflation continues to rise. The yen remains under pressure and took it on the chin after Fed Chair Powell's speech at Jackson Hole on Friday. Powell's brief speech went straight to the point, pledging to continue raising rates until inflation was brought under control. Powell pointedly said that one or two weak inflation reports would not cause the Fed to U-turn on its tightening, a veiled reference to the market euphoria which followed the July inflation report, which was lower than the June release. With the equity markets taking a tumble after Powell's speech, it appears that investors have finally gotten the Fed's hawkish message. Powell's speech removed any doubts about the Fed's plans to continue raising rates, but the size of the increases will depend not just on inflation, but also on other economic data. Overshadowed by Jackson Hole, US Personal Income and Spending data was weaker than expected. As well, the Core PCE index, the Fed's preferred inflation indicator, fell to 6.3%, down from 6.8% and below the forecast of 7.4%. If Friday's non-farm payrolls report is weaker than expected, it would be a clear indication that the sharp increase in rates is having its desired effect and the economy is slowing. In such a scenario, Fed policy makers may be more inclined to raise rates at the September meeting by only 50 basis points, rather than 75bp. USD/JPY is testing support at 1.3822. The next support line is at 137.01 1.3891 and 1.4012 are resistance lines
by OANDA