Friday January 6th, 2023

The US$ strengthens, oil prices steady, equity markets are mixed while US yields rise ahead of the US jobs report. Currencies ease and equities struggle to maintain gains as investors brace for US jobs report which will help chart the path for future Fed monetary tightening. Today, Nonfarm payrolls are forecasted to increase by 200k in December, the unemployment rate is expected unchanged at 3.7% and the average hourly earnings forecast up 5% y/y which is expected to continue to support a stronger US$. In Asia, China’s reopening moves and increasing policy support measures to boost its economy helped Asian equities finish the first trading week of 2023 in positive territory. Today US NFP & Jobs report, ISM Services PMI, CAD Net Change in Employment Dec, Ivey PMI as well we see ECB Lane four Fed speakers which could all have an impact on markets today. In other news. Euro-zone inflation rate slides to 9.2% from 10.1% as energy price surge cools. McCarthy’s fight to be the US House Speaker continues into a fourth day. Korea, Samsung profits fall 69% as demand for semiconductors slumps. Travel curbs continue to increase as covid hit China readies its reopening. US warship sails through sensitive Taiwan strait; China angered. Biggest UK house price fall recorded since the 2009. China resumes coal trade with Australia after 3-year halt. In Currency markets. The US$ index strengthens to a 4-week high ahead of an expected strong US jobs report. China CNY gains as policy support measures extends to the troubled property sector. CNY firms 0.25% while Asian currencies are down 0.1% on average vs US$. Trading currencies are under pressure with MXN flat, AUD down 0.15%, NZD, NOK & CHF slip 0.3%, SEK & ZAR weaken 0.5%, and JPY falls 0.7% vs US$.

Oil prices edge higher supported by hopes of a China demand boost as well as data showing lower US fuel inventories following the recent winter storms across the US. C$ continues to be at the mercy of the US$, weakening ahead of the US jobs report. In recent polls analysts expect C$ to hold around 1.35 in Q1 and then strengthen towards 1.3000 in to Q2 vs US$. Intraday alongside US data, Canadian Net Change In employment in December is expected to come in at 8k vs 10.1K, the unemployment rate is expected to rise slightly to 5.2%. Support rises to 1.3550, while resistance resets to 1.3685.

EURCAD continues to edge higher after a better-than-expected Eurozone inflation report. Support holds at 1.4300 while resistance remains at 1.4500.

Euro stalls at 1.0500 ahead of US jobs data. Euro stalls ahead of the US jobs data but looks vulnerable to further weakness. Euro zone inflation report showed levels drop into single digits to 9.2% in Dec vs 10.1% in November as warmer weather helped cool energy prices. Intraday US data will drive intraday direction. Support resets to 1.0430 while resistance lowers to 1.0600.

GBPEUR continues under selling pressure as ongoing strike pressure in the UK keeps investors cautious of returning to the pound. Support holds at 1.1250 (.8888) while resistance remains at 1.1400 (.8772).

GBP extends its weakness breaching through 1.1900 ahead of the US data. In another sign of recession in the UK, British house prices slid in December, capping the largest quarterly drop since the 2009 financial crisis. Ongoing strikes across the UK continue to impact growth and will continue to keep the GBP under pressure in Q1. Today US jobs report will drive intraday direction. Support resets to 1.1790, while resistance lowers to 1.1950.