Dollar Struggles to Rise on Solid Job Data

While the US delivers a set of solid non-farm payroll data, Dollar struggles to ride on it to extend the near term rebound. On the other hand, the report is being cheered by stocks investors, with futures shooting higher. Thus, risk-on sentiment is capping the greenback’s rally attempt. Softer than expected wage growth might be a factor behind all these developments. Meanwhile, Canadian Dollar is also sluggish despite the stellar employment data. It looks like forex traders will now look forward to next week’s US CPI for the big move.

In Europe, at the time of writing, FTSE is up 0.53%. DAX is up 0.24%. CAC is up 0.70%. Germany 10-year yield is down -0.067 at 2.251. Earlier in Asia, Nikkei rose 0.59%. Hong Kong HSI dropped -0.29%. China Shanghai SSE rose 0.08%. Singapore Strait Times dropped -0.48%. Japan 10-year JGB yield rose 0.0846 to 0.506, closed above BoJ’s 0.5% cap.

US NFP jobs grew 223k in Dec, unemployment rate down to 3.5%

US non-farm payroll employment increased 223k in December, above expectation of 200k. Payroll employment rose by 4.5m in 2022 (an average monthly gain of 375kj, less than the increase of 6.7m in 2021 (an average monthly gain of 562k).

Unemployment rate dropped to 3.5%, better than expectation of 3.7%. Participation rate ticked up from 62.2% to 62.3%.

Average hourly earnings rose 0.3% mom, below expectation of 0.4% mom. Over the past 12 months, average hourly earnings rose 4.6% yoy.

Canada employment grew 104k in Dec, unemployment rate down to 5%

Canada employment grew strongly by 104k in December, well above expectation of 5.5k. Total employment also surpassed prior peak in May.

Unemployment rate dropped from 5.1% to 5.0%, below expectation of 5.2%, just above record low of 4.9% reached in June and July. Participation rate rose 0.2% to 65.0%.

Eurozone CPI slowed to 9.2% yoy in Dec, CPI core rose to 5.2% yoy

Eurozone CPI slowed from 10.1% yoy to 9.2% yoy in December, below expectation of 10.0% yoy. CPI core (excluding energy, food, alcohol & tobacco) rose from 5.0% yoy to 5.2% yoy, above expectation of 5.2% yoy.

Looking at the main components energy is expected to have the highest annual rate in December (25.7%, compared with 34.9% in November), followed by food, alcohol & tobacco (13.8%, compared with 13.6% in November), non-energy industrial goods (6.4%, compared with 6.1% in November) and services (4.4%, compared with 4.2% in November).

Eurozone economic sentiment indicator rose to 95.8 in Dec

Eurozone Economic Sentiment Indicator rose from 94.0 to 95.8 in December. Industry confidence rose from -1.9 to -1.5. Services confidence rose from 3.1 to 6.3. Consumer confidence rose from -23.9 to -22.2. Retail trade confidence rose from -6.6 to -3.6. Employment Expectations Indicator was unchanged at 107.3.  Economic Uncertainty Indicator dropped from 28.5 to 27.5.

EU Economic Sentiment Indicator rose from 92.7 to 94.2. Employment Expectations Indicator dropped from 106.3 to 105.9. Economic Uncertainty Indicator dropped from 27.9 to 26.9. Amongst the largest EU economies, the ESI increased in Germany (+2.0), Spain (+1.9), the Netherlands (+1.5), Italy and Poland (both +0.9), while it eased again in France (-1.3).

Eurozone retail sales volume rose 0.8% mom in Nov, EU up 0.9% mom

Eurozone retail sales volume rose 0.8% mom in November, above expectation of 0.1% mom. For the month, the volume of retail trade increased by 1.6% for non-food products and by 1.0% for automotive fuels, while it decreased by -0.9% for food, drinks and tobacco.

EU retail sales volume rose 0.9% mom. Among Member States for which data are available, the highest monthly increases in the total retail trade volume were registered in Spain (+3.6%), Poland (+2.6%) and Sweden (+2.3%). The largest decreases were observed in Luxembourg (-2.0%), France and Croatia (both -1.0%) and Slovenia (-0.5%).

Elsewhere

UK PMI Construction dropped from 50.4 to 48.8 in December. France consumer spending rose 0.5% mom in November. Swiss retail sales dropped -1.3% yoy in November. Germany retail sales rose 1.1% mom in November while factory orders dropped -5.3% mom.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.0482; (P) 1.0557; (R1) 1.0599; More

EUR/USD is still holding inside range of 1.0481/0733. Intraday bias stays neutral for the moment. On the downside, break of 1.0481 will confirm short term topping, on bearish divergence condition in 4 hour MACD. Deeper fall would be seen back to 1.0289 support and below. On the upside, however, firm break of 1.0733 will resume whole rally from 0.9534.

In the bigger picture, focus stays on 38.2% retracement of 1.2348 (2021 high) to 0.9534 at 1.0609. Rejection by 1.0609 will suggest that price actions from 0.9534 medium term bottom are developing into a corrective pattern. Thus, medium bearishness is retained for another fall through 0.9534 at a later stage. However, sustained break of 1.0609 will raise the chance of trend reversal and target 61.8% retracement at 1.1273.

Economic Indicators Update

GMT Ccy Events Actual Forecast Previous Revised
23:30 JPY Labor Cash Earnings Y/Y Nov 0.50% 1.50% 1.80% 1.40%
07:00 EUR Germany Retail Sales M/M Nov 1.10% 1.50% -2.80%
07:00 EUR Germany Factory Orders M/M Nov -5.30% -0.50% 0.80% 0.60%
07:30 CHF Real Retail Sales Y/Y Nov -1.30% 3.00% -2.50% -2.60%
07:45 EUR France Consumer Spending M/M Nov 0.50% -1.00% -2.80% -2.70%
09:30 GBP Construction PMI Dec 48.8 50.6 50.4
10:00 EUR Eurozone CPI Y/Y Dec P 9.20% 10.00% 10.10%
10:00 EUR Eurozone CPI Core Y/Y Dec P 5.20% 5.00% 5.00%
10:00 EUR Eurozone Economic Sentiment Indicator Dec 95.8 93 93.7 94
10:00 EUR Eurozone Industrial Confidence Dec -1.5 -1.6 -2 -1.9
10:00 EUR Eurozone Services Sentiment Dec 6.3 2.1 2.3 3.1
10:00 EUR Eurozone Consumer Confidence Dec F -22.2 -22.2 -22.2
10:00 EUR Eurozone Retail Sales M/M Nov 0.80% 0.10% -1.80% -1.50%
13:30 USD Nonfarm Payrolls Dec 223K 200K 263K 256K
13:30 USD Unemployment Rate Dec 3.50% 3.70% 3.70% 3.60%
13:30 USD Average Hourly Earnings M/M Dec 0.30% 0.40% 0.60%
13:30 CAD Net Change in Employment Dec 104K 5.5K 10.1K
13:30 CAD Unemployment Rate Dec 5.00% 5.20% 5.10%
15:00 USD ISM Services PMI Dec 55.5 56.5
15:00 USD Factory Orders M/M Nov -0.90% 1.00%
News

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