New York Forex Report: NFP’s Close Out The First Week of 2018

New York Forex Report: NFP’s Close Out The First Week of 2018

New York Forex Report: The first week of 2018 nears completion with the market’s focus on US employment. Expectations are for a stronger print, after ADP yesterday surprised with a 250k print vs 190k expectation. While this keeps the labour market buoyant, wage growth has been a key factor for policy makers. The risk is it remains modest. Nov saw a monthly rise of only 0.2%, which left annual growth at only 2.5%. Market watchers are forecasting a 0.3% increase, which, if realised, would leave the annual rate unchanged. Economists expect the increasingly tight labour market to lead to an acceleration in wage growth this year. Indication that this is happening will be one of the key factors in determining the pace of Fed rate hikes this year. Markets started this year with a positive perspective on US rates, so disappointment today risks seeing moves being reversed somewhat. Focus will then be on US CPI next Friday.

NORTH AMERICA US ADP employment report surprised on the upside, with 250k jobs reported in the private sector in Dec, its best in nine months shored up by hirings in the services and manufacturing sectors. This reinforced believes that the US job market is on its continuous recovery path. This overshadowed the other job report that showed initial jobless claims unexpectedly rose 10k to 250k for the week ended Dec-30, which remained well below the 300k that pointed to a still firm job market. In a separate release, final print of PMI services showed moderation in the sector came in slower than initially estimated, with the index tapering off to 53.7 in Dec from Nov’s 54.5, vs an advance reading of 52.4.

EUROPE EU PMI services rose to a record high of 56.6 in Dec, tweaked 0.1ppt higher from the initial estimate of 56.5, and from 56.2 in Nov, confirming that the Eurozone economy is firing on all cylinders that will pave the way for the region to continue chart upside surprises in growth this year. UK data were surprisingly decent even though Brexit uncertainties continue to haunt. PMI services inched up more than expected to 54.2 in Dec, marking its 17th straight month of expansion that bolstered hopes the UK economy is not in worse shapes as feared. Mortgage approvals also unexpectedly increase to 65.1k in Nov while nationwide house prices quickened a notch to 2.6% YoY. Net consumer credit held steady at £1.4bn during the same month, pointing to sustained momentum in the housing and consumer sectors.

ASIA In Japan, the final Nikkei PMI print turned in a tad softer than the initial estimate of 54.2, but still remained at record high level of 54.0 in December, driven by higher output and new orders. China continued to spring positive surprises. Caixin PMI services jumped to a record high of 53.9 in Dec, tracking the rise in the official PMI print to 55.0 released last week, confirming better momentum in the services sector in China

EURUSD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bullish

Technical: 1-3 Day View – 1.2077 achieved as 1.1990 supports expect a test of 1.2135/65 this area should stall the advance on the initial test. Only a move south of 1.18 concerns the near term bullish bias.

1-3 Week View – 1.2130 the next upside objective. Weekly close below 1.16 neutralises bullish objectives opening a test of 1.14.
Retail Sentiment: Bearish
Trading Take-away: Long

GBPUSD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bullish

Technical: 1-3 Day View – Prior cycle highs of 1.3545 achieved as 1.3490 supports expect a test of 1.3657, only below 1.34 concerns the near term bullish bias

1-3 Week View – 1.3263 achieved as this acts as support 1.3836 is the next upside objective only a close back below 1.30 would jeopardise the bullish advance
Retail Sentiment: Bearish
Trading Take-away: Long

USDJPY
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bearish

Technical: 1-3 Day View – Anticipated 113.30/60 resistance capped the advance a breach of 112 will open a retest of pivotal 110.80/60, near term price action is consolidating in 113.60/112 range.

1-3 Week View – As 108.40 equidistant swing support survives on a weekly closing basis bulls will look for a grind higher to retest 115, a close below 108 negates the broader bullish theme and opens the psychological 100 magnet
Retail Sentiment: Neutral
Trading Take-away: Neutral

EURJPY
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bullish

Technical: 1-3 Day View – 136 the primary upside objective is achieved expect 136.70/137 to cap advance on initial test, near term support is sited at 135.60/40. As 135 survives on a closing basis 141 becomes the next upside magnet.

1-3 Week View – 136.10 is the principle upside objective , rotation within the broader range persists breach of 132.20 sets a retest of 131.50, a closing breach of 131 concerns the bullish consolidation bias.
Retail Sentiment: Bearish
Trading Take-away: Long