Forex Signals Brief January 5: Will NFP Close A Positive Week for Employment?
Yesterday the ADP and unemployment claims report beat expectations while today the non-farm employment numbers will close the week
Yesterday markets were, dominated by early-year flows. EUR/USD moved yo and down in a range between 1.0940-1.0970, while GBP/USD traced a similar pattern in the 1.2675-1.2775 range. USD/JPY on the other hand, was bid strongly for the third day after some talk that the BOJ will be more patient in bringing interest rates back to positive territory policy due to the earthquake, but that sounds like a stretch.
The ADP employment numbers and initial unemployment claims data came above expectations, which was a bit of a surprise after Wednesday’s lower JOLTS job openings figures. That caused the US dollar to rise and 10-year Treasury yields to increase above 4%. They increased the stakes for today’s non-farm payrolls report while lowering market-implied FED cuts for 2024.
Today’s Market Expectations
The economic calendar has been quite heavy for the first week of the year, and will end up with some important data, starting with the construction PMMI from the UK, which is expected to show improvement after yesterday’s higher revisions for services PMI. The Eurozone inflation report will be released next, with the headline CPI YoY projected to increase to 3.0% in December, up from 2.4% previously, while the Core YoY is expected to tick lower to 3.5%, up from 3.6% in November. The market expects roughly 160 basis points of rate reduction in 2024, with the first 25 basis point cut coming in April.
The Canadian employment report will be released in the US session, and it is predicted to reveal that the unemployment rate to tick higher to 5.9%, up from 5.8% previously. However, the numbers are not likely to have an impact on the January BoC decision because the central bank may want to see additional data in Q1 before making a judgment, especially following the last hotter-than-expected inflation report.
The US Non-Farm Payrolls report is predicted to show 168K jobs added in December, up from 199K previously, and the unemployment rate is anticipated to tick higher to 3.8% from 3.7% previously. The Average Hourly Earnings YoY are expected to tick lower to 3.9% vs. 4.0% previously, and the MoM reading is expected to be 0.3% vs. 0.4% previously. The US ISM Services PMI will close the week and it is projected to tick lower to 52.6 points from 52.7 before.
BTC/USD – Daily Chart
Closing our Ethereum Buy Signal
In 2022, cryptocurrency losses were substantial, with some losing up to 80% of its market capitalization, and Ethereum plunging below $5,000. ETH/USD, on the other hand, has made new highs this year, demonstrating that the trend has been positive throughout the year, with moving averages continuing to push the lows higher. Buyers reappeared this week after a modest retreat, but they failed to take out last week’s high and reach $2,500, and we saw a drop to $2,127 on Wednesday, but yesterday the price reversed back up with the 50 SMA (yellow) acting as support on the daily chart.
Ethereum – Daily Chart
- ETH Buy Signal
- Entry Price: $1,947.38
- Stop Loss: $1,490
- Take Profit: $2,500
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