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US Jobs Rise Again

The latest set of jobs data out of the US today has added further pause for thought for those projecting near-term US rate cuts. With the headline NFP figure printing 216k vs 168k expected, the US economy is proving to be more resilient than many were expecting over recent months. The unemployment rate remains unchanged at 0.7% along with wages growth holding firm at 0.4%, above the 0.3% expected.
 

Rate Cut Pricing Shifts

In all, the data points to another robust month for the economy in terms of the labor market and has seen traders scaling back their rate cut expectations accordingly. Pricing for a March rate cut has now fallen to just above 50% from around 66% a day earlier.
 

Market Reaction

The US Dollar spiked higher initially in response to the data but has since cooled a little from those immediate highs. Looking ahead, however, USD is likely to remain supported as a result of traders scaling back their US rate cut expectations for early next year. Incoming data will now be closely watched over the month with any further strength in key readings likely to see March rate-cut pricing falling back below 50%.
 

Risk Impact

The spike higher in USD this week has fuelled a weakening across risk markets. The Nasdaq has fallen around 4% this week and looks vulnerable to further losses if current USD strength continues. In FX markets, commodity currencies have been among the hardest hit, so too the Japanese Yen.
 

Technical Views

Nasdaq

(Click on image to enlarge)

The correction lower in the Nasdaq has seen the market falling back under the 16635.80 level. Price is now fast approaching a test of the 15925.08 level support which marks the broken July and November highs. This will be a key pivot for the market with bulls needing to defend this zone to maintain a broader bullish bias. 

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