Outlook: We get nonfarm payrolls today, expected at 550,000 and more evidence the economy is booming. Powell took the wind out of payrolls’ sales by telling Congress this week that fighting inflation beats promoting growth, so payrolls should have less of a market-roiling effect than usual.

It’s a little interesting that the Stock Traders Almanac reports “Historically, the market has responded favorably to the jobs report released in December. S&P 500, NASDAQ, Russell 1000 and Russell 2000 have all advanced sixteen times in the last twenty-one years. DJIA’s record has one more loss. Average gains range from a low of 0.38% by DJIA to a solid 0.77% by Russell 2000. Sizable losses in 2018 do drag down historical average performance, but the overall trend spanning the last twenty-one years remains bullish.”

We are bombarded with risk-off news and yet we still see some lingering risk-off. We have new meds for covid plus those tests, both of which the US government is funding in massive amounts. We have OPEC nodding its head at US and allied power and sticking to the output agreement as they requested, even if OPEC reserved the right to change its mind. It’s a two-edged sword of a decision but the sharper side pointed down.  Yesterday Congress  passed the bill funding the government to Feb 18, kicking the can down the road but still avoiding a shutdown that could have started at midnight tonight. 

It’s a bit of a mystery why everything is not rallying like crazy at the relief from anxiety. It appears traders are waiting for CPI next week and the presumed effect on the Fed, which meets Dec 14-15. Fresh data can re-jigger tapering and first-hike expectations. Former NY Fed Pres Dudley said tapering should be doubled from $15 billion and that would allow the first hike as early as March. This comment has tremendous weight because it’s the NY Fed that oversees and manages liquidity, and NY Fed presidents know more about money market and bond market sentiment and liquidity than anyone else. If the markets accept what he is saying without throwing a tantrum, that’s an important signal to Mr. Powell. In practice, March seems a bit fast, not that we have any historical precedent.

The CME FedWatch tool for the March 16 meeting gives a 26.9% probability of a first hike, not enough to scare anyone, but consider it was 18.1% only a week ago. We expect Fed rhetoric or keep refining the possible every couple of days.

All of this is dollar-friendly. 


This is an excerpt from “The Rockefeller Morning Briefing,” which is far larger (about 10 pages). The Briefing has been published every day for over 25 years and represents experienced analysis and insight. The report offers deep background and is not intended to guide FX trading. Rockefeller produces other reports (in spot and futures) for trading purposes.

To get a two-week trial of the full reports plus traders advice for only $3.95. Click here!

This morning FX briefing is an information service, not a trading system. All trade recommendations are included in the afternoon report.

Feed news

Latest Forex Analysis

Latest Forex Analysis

Editors’ Picks

EUR/USD struggles to rebound, holds near 1.1150 after US data

EUR/USD trades around 1.1150 in the early American session on Friday as investors assess the latest inflation data from the US. According to the US Bureau of Economic Analysis, Core PCE Price Index rose to 4.9% on a yearly basis in December from 4.7% in November, surpassing the market expectation of 4.8%. 


GBP/USD clings to small gains above 1.3400 on mixed US data

GBP/USD posts modest daily gains slightly above 1.3400 on Friday as the dollar rally loses steam. The data from the US showed that the core PCE inflation edged higher to 4.9% in December. On a negative note, Personal Spending contracted by 0.6% on a monthly basis.


Gold recovers modestly after US data, stays below $1,800

Gold managed to stage a rebound from the multi-week low it set below $1,780 but continues to trade deep in the red near $1,790. The benchmark 10-year US Treasury bond yield is rising more than 1% on the day after US data, limiting XAU/USD's recovery.

Gold News

Bitcoin Weekly Forecast: Federal Reserve cannot tame BTC’s uptrend

Bitcoin has experienced some significant losses over the past few weeks, with a more dramatic drop occurring this week after the Fed's decision was announced. As losses have extended and BTC has entered into the $30,000 zone, concerns regarding Bitcoin being in a bear market have increased.

Read more

Apple share price set to rise after another record quarter

With the Nasdaq closing at its lowest level in seven months yesterday, the Apple share price has also found itself on the end of the recent weakness in tech shares, down over 12% from its record highs in early January.

Read more