U.S. Markets Timid Ahead Of Weekend

Posted Friday, January 10, 2020 by
Shain Vernier • 2 min read

The lead story of today’s session has been traders limiting risk ahead of the weekend break. Following a pre-market release of U.S. Non-Farm Payrolls (Dec.), the U.S. equities markets have flatlined. At the halfway point of the U.S. session, the DJIA DOW (-50), S&P 500 SPX (-1), and NASDAQ (+3) are slightly mixed. Once again, the NASDAQ is leading the way in anticipation of tech being the big winner from the U.S./China Phase One trade deal.

If you have been tuned in to FXLeaders today, then you are up to speed on this morning’s U.S. Non-Farm Payrolls report. To recap, here is a quick look at the highlights:

Events                                                               Actual     Projected     Previous

Non-Farm Payrolls (Dec.)                                 145K             164K              256K

Unemployment Rate (Dec.)                               3.5%             3.5%               3.5%

Average Hourly Earnings (YoY, Dec.)                2.9%            3.1%                3.1%

This group of figures is far from positive. New jobs are down, as are wages. Although Non-Farm Payrolls were expected to drop, the size of the decrease is a surprise. Seasonal employment typically spikes during the holiday season; it looks like 2019 was a disappointment in that regard.

Despite the lagging NFP report, the U.S. equities markets are holding relatively firm. However, there are some bids hitting gold, suggesting a slight risk-averse attitude going into the two-day halt.

Equities Markets Flat, Gold In Bullish Territory

Given the active news week that we have had, it is no surprise to see gold showing strength ahead of the weekend. Tensions with Iran, next week’s signing of Phase One, and even the Trump impeachment have many institutional players on high alert. Given the uncertainty, it looks like gold is the popular insurance policy until Monday’s open.

February Gold Futures (GC), Daily Chart
February Gold Futures (GC), Daily Chart

Here are the levels on my radar for the near future:

  • Resistance(1): Spike High, 1613.3
  • Support(1): 38% Current Wave, 1560.2

Overview: As it stands, the 38% Current Wave retracement (1560.2) is the key level in this market. If we see a late-day rally and weekly close above the 1560.0 area, a bullish bias is warranted for the gold markets early next week.

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