The price action in the London session was relatively modest as the markets await the December US employment report this morning at 830am ET to make their move.
The consensus has shifted to -525K, from -500K earlier in the week, mainly on the disastrous ADP report which came in at -693K for the month. Our forecast is for a decline in the area of -615K payrolls and for the unemployment rate to tick higher to 7.0% from 6.7% last month. Should this come to fruition, USD weakness post-NFP should be palpable and we would not rule out seeing EUR 1.3850 before the day is up. However, a number better than -500K could see the buck rally in size.

EUR/USD was up about 15 pips in London trading and sitting near the 1.37 level ahead on the NY session. GBP/USD caught a decent bid of about 70 points to just above the 1.53 zone. The pair failed to hold above this key level yesterday and we would expect good sellers up here on a better than expected US nonfarm payroll number. USD/CAD was little changed around 1.1850/60 despite a weaker than expected Canadian employment report which showed -34K jobs lost in December. The details of the report were even more ominous as full time employment sank -70K while part-time added 36K – not exactly a good sign for future consumer spending trends. Look for USD/CAD to retest weekly lows near 1.1750 on a weaker than expected NFP today.

Upcoming Economic Data Releases (NY Session) previous forecast

  • 1/9 13:15 GMT CA Housing Starts DEC 172.0K 170.0K

  • 1/9 13:30 GMT CA Building Permits MoM NOV -15.70% -5.00%

  • 1/9 13:30 GMT US Change in Nonfarm Payrolls DEC -533K -525K

  • 1/9 13:30 GMT US Unemployment Rate DEC 6.70% 7.00%

  • 1/9 13:30 GMT US Average Hourly Earnings MoM DEC 0.40% 0.20%

  • 1/9 13:30 GMT US Average Weekly Hours DEC 33.5 33.5

  • 1/9 15:00 GMT US Wholesale Inventories NOV -1.10% -0.80%