USD/JPY Tests Resistance, USD/CAD To Support After Healthy NFP’s

NFP BEATS, US DOLLAR PUSHES UP TO TEST RESISTANCE AT PRIOR SUPPORT

This morning’s Non-Farm Payrolls report out of the United States was released to a large beat of the expectation on the headline number, as +312k jobs were added last month in the US versus the expectation of +173k. This was partially offset by an unexpected rise in the unemployment rate to 3.9% from a prior multi-decade low of 3.7%, but Average Hourly Earnings came-in strong, showing continued strength in wage gains as December saw a .4% increase in AHE to make for an annualized 3.2% clip.

The net response was a quick jump in the Greenback after prices had slid-lower over the past two days, and resistance is coming in around the 96.47 Fibonacci level that had previously helped to hold support earlier this week. The week is not yet done, however, as a speech from Chair Powell and Former FOMC Chair, Janet Yellen will be in focus later this morning. This will likely keep risk markets on the move after a busy start to the New Year.

US DOLLAR FOUR-HOUR PRICE CHART

(Click on image to enlarge)

us dollar usd four hour price chart

NEXT WEEK’S ECONOMIC CALENDAR

For the first full trading week of 2019, the economic calendar is relatively light. This can keep the focus on macro themes after the burst of volatility to start the New Year, with traders hovering around risk markets to see whether continuation shows in this most recent bout of risk aversion. Of note, Japan re-opens after being closed for this week; and as noted yesterday, Japan’s Ministry of Finance has spoken up regarding the surge in the Yen, threatening intervention if needed.

This will likely be the focus in the early part of next week, and Wednesday brings the highlight of next week’s economic calendar with a rate decision out of the Bank of Canada. Expectations are for a hold at this rate decision after Poloz denoted slowing growth at the Bank’s December meeting: But a surge in the Canadian Dollar this week could keep USD/CAD of interest as the bullish trend that drove the pair throughout Q4 has finally found some element of a pullback.

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