- US jobs expected to rise 400k, risk for upside surprise
- Canadian employment gains to slow compared to November
- US dollar steady ahead of NFP report
USDCAD Snapshot: Open 1.2713-17, Overnight Range-1.2708-1.2729, previous close 1.2725, WTI open $80.23, Gold open $1791.29
The Canadian dollar is trading sideways ahead of today’s US and Canadian employment reports. Canada is forecast to have added 27,500 jobs in December, well-below November’s 153,700 result but it is the US data that will drive Canadian dollar direction.
The US nonfarm payrolls data is expected to show 400,000 new jobs were added in December while the unemployment rate ticked lower to 4.1% from 4.2%. Some analysts are expecting an upside surprise to the employment numbers because of the 807,000 job gains reported by ADP on Wednesday, despite the ADP report being a poor indicator of NFP results.
Wednesday’s FOMC minutes suggested that the Fed may raise interest rates at the March meeting. Yesterday, St Louis Fed President and noted hawk, James Bullard said rates could rise in March and added that subsequent increases could occur earlier than expected. A robust NFP report would reinforce the view.
The US dollar is underpinned by the hawkish Fed outlook and in anticipation of a higher than expected NFP result. That suggests the downside is vulnerable if the data disappoints.
Markets were cautious overnight. Asia equity markets closed mixed. Australia’s ASX 200 gained 1.28%, Hong Kong’s Hang Seng rose 1.82%, and Japan’s Nikkei 225 was unchanged. European bourses are trading cautiously, and all posted modest losses. Oil and gold are a tad higher compared to yesterday’s NY close and the US 10-year Treasury yield is 1.72
Bitcoin bulls are still feeling pain after prices tumbled to $41,581.50 from $46,766.25 following the FOMC minutes and remain near that low today.
EURUSD ignored a flurry of economic data and drifted in a 1.1291-1.1318 range. German November Industrial Production was weaker than expected (-2.4% y/y), as were the Eurozone Consumer Confidence Index and the Economic Sentiment Indicator. Eurozone inflation was 5.0% y/y mainly due to soaring energy costs. Retail Sales rise 1.0% in November. However, traders only had eyes for the pending US data.
GBPUSD traded with a modestly bullish bias in a 1.3530-1.3556 range. UK Construction PMI, at 54.3, was a non-event. It was better than forecast but below the October result. GBPUSD continues to benefit from BoE rate hike expectations and the easing of Omicron concerns.
