NFP always seems to get a big build-up although maybe a little less so on this occasion due to events in the Middle East. Regardless it gives a last look back at 2019 with the markets looking for a strong number.

As usual, action before the release was limited in both Asia and Europe, so let’s get straight into it.

Of course, it wasn’t just US employment data out today – Canada was also releasing data for December. For the US the headline number came in at +145k versus +164k expected. There was also a minor downward revision to November’s number.

The unemployment rate remained steady at 3.5%. For Canada, there was an increase in employment of 35.2k, all of which came from full-time employment.

The unemployment rate dropped to 5.6%. So how did the markets react? Initially, the USD weakened a few spreads and with that US equity futures turned briefly negative. But eventually, traders brushed off the weaker US data which saw USDJPY trade up to 109.69 and EURUSD down to 1.1085.

The DJ briefly touches 29,000, up over 40 points. USDCAD had an initial move lower from 1.3065 to 1.3029 on the back of the stronger CAD number.

But as the day progressed the market began to have a weary feel about it with equities slowly slipping lower as traders were happy to lock in some profits for the week. In the end, all three major US indices closed lower, the DJ by 133 points.

The USD would also suffer, with EURUSD squeezing to 1.1127 and USDJPY drifting to 109.45. USDCAD would squeeze back to 1.3060 on the back of weaker oil prices.

All in all a drab end to the week with no real significant moves. You get the feeling it will take some fresh news from the Middle East to get us going again.

From a technical perspective, I’ll keep this very simple. Take a look at an hourly USDJPY chart and you will see around seven highs made with a few pips of 109.70 stretching back to December of last year.

Even in the face of record equity markets and de-escalation of events in the Middle East, we have been unable to move past this level.

The day’s close was 109.50 so plenty of ways to play this into next week. Has to be something lurking up there right?

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David Hannigan

A graduate of the Cass Business School, Dave's career began with Credit Suisse as an Equity Options Trader on the London Stock Exchange, before moving into the world of FX with Chemical Bank and Citibank. 1994 saw him join National Australia Bank, first as a Senior Dealer, then Senior Vice President and Chief Dealer.

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