With another strong job market report, the US economy is removing doubts of its recovery and proves that the US may be the only nation that has not been affected by the global slowdown. The December Non-farm Payroll was 257K – higher than expected 228K. The unemployment rate slightly rose to 5.7% – however this was in large due to the increased numbers of job seekers – a promising sign of optimistic Americans returning to work. The most inspiring data though may be that the average wage grew by 0.5% versus an expected 0.3%. This was the highest rise since November 2008.
As discussed in previous market wraps, the FOMC are most likely waiting for an improvement in wages to decide whether to raise interest rates in June as formerly expected. The January hourly earnings data may be the decisive one that eliminates speculations on a later rate hike. As the WSJ Jon Hilsenrath said, the strong job report increases the possibility that the Fed may eliminate “patience” in their March statement.
The US Dollar surged against most major peers after the NFP data. The Euro lost 1.4% against the Dollar to 1.1315 on Friday. The Euro Dollar left a 200-pips roller-coaster movement last week with a long upper shadow doji in the weekly chart. The 1.1530 resistance twice suppressed intentions of a Euro rebound, whilst the 1.1300 support below is the recent session lows – a breakout which means a double-top pattern has formed in the H4 chart.
We can see similar falls of majors against the USD after the NFP, but the Yen will be the most important one to watch. USDJPY rose above 119.00 for the first time in 3-weeks. The bullish bar has upwardly broken the consolidation range since January 20th and topped at the downward trendline of the triangle pattern since reaching 121.80 December 8th last year. The rise must have triggered some stop buy orders around 119. If the trend continues, more buy orders may push the exchange level to its former high.
Back to stock markets, the Shanghai Composite lost another 1.93% to 3076, continually ignoring the news that the PBOC cut reserve rate by 0.5%. The Nikkei Stock Average gained 0.82%. Australian ASX 200 gained 0.16% to reach new highs again 5820. In the European markets, the UK FTSE was down 0.18%, the German DAX lost 0.54% and the French CAC Index slid 0.26%. US stocks fell on the Greek situation. The S&P 500 closed 0.34% lower to 2055. The Dow lost 0.34% to 17825, and the Nasdaq Composite Index fell by 0.43% to 4744.
On the data front, RBA Governor Stevens will have a speech at 11:15am AEDST, and ANZ Job Advertisements will be out at 11:30am AEDST.
Have a great trading day!
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