A high number of Covid-19 cases in December is expected to have halted hiring in the US in December. The ADP report earlier this week was a disappointment and showed the hiring having been reduced significantly in December. Over the last two days the USD has gained some ground against the EUR, GBP, JPY and CHF but not so much against the commodity currencies. This has taken EURUSD and Cable near the recent support levels and rallied USDJPY and USDCHF to resistance levels. Today being the NFP Friday traders could be in a wait and see mode until the employment numbers are released in the afternoon European time. The ADP non-farm payroll report on Wednesday was a grave disappointment with the actual number coming in at -123K while the analyst consensus had expected to see a slight increase of 60K in the number of new jobs. This report was in stark contrast to the previous ADP employment data release which saw an increase of 304K in new hiring. The indications are therefore that the official NFP release might fall short of the analyst expectations (60K). The high number of Covid-19 infections in December is quoted as a reason for the low expectation. In addition to the non-farm payroll data, the ever so important earnings data is also released today. Analysts expect the average hourly earnings to be confirmed at 0.2% with the previous number being at 0.3%. The unemployment rate is expected to go up a notch (0.1%) to 6.8%. Canadian employment change is projected to come in negative at -32.5K (62.1K previous) and their unemployment rate to 8.7% from 8.5% previously. See our economic calendar for times and details. By reading further you agree with our disclaimer at the bottom of this page and acknowledge that we do not provide investment advice.

EURUSD has moved to the lower end of the upward-pointing price channel and is therefore oversold and relatively near to support levels. This sets our bias to the long side. The fact that both houses of the US parliament are now controlled by the Democrats (larger economic aid packages likely) supports the case for buying EUR against the USD. If price breaks above 1.2283 we expect the breakout to result to a 30 to 40 pip intraday trading opportunity taking EURUSD roughly to 1.2320. Usually, we have two targets but today’s major risk event does bring quite a number of unknown factors into the equation. We have expectations about the NFP number but don’t know what the actual number will be and don’t know how the market will react to the number. Therefore we will refrain from hypothesising further and wait to see how the market reacts to the news once it is out. The lower end of the channel has been violated but not on a closing basis, therefore this violation is not decisive. However, if price falls below the channel low and 1.2234 support the next key support level at 1.2209 is likely to come into play. Other key support and resistance levels are 1.2129, 1.2152, 1.2177, 1.2283 and 1.2349.  Open a VIP Black account with us. There are no per trade execution or monthly fees on our VIP Black accounts. 

Recent macroeconomic data releases

  • UK Final Manufacturing PMI 57.5, 57.3 expected
  • Canadian Manufacturing PMI 57.9, 55.8 previous
  • US ISM Manufacturing PMI 56.6 expected
  • ADP Non-Farm Employment Change -123K, 60K expected
  • US Unemployment Claims 787K, 798K expected
  • Canadian Ivey PMI 46.7, 53.1 expected
  • US ISM Services PMI 57.2, 54.5 expected

Important macroeconomic data releases this week

  • Canadian Employment Change -32.5K expected
  • Canadian Unemployment Rate 8.7% expected
  • US Average Hourly Earnings 0.2% expected
  • US Non-Farm Employment Change 60K expected
  • US Unemployment Rate 6.8% expected

You may access the times and dates in the economic calendar here.

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Janne Muta
Chief Market Analyst
TIOmarkets.com

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