US NONFARM PAYROLLS HEADLINE FINAL SESSION OF WEEK
After an active first week of 2018, attention shifts on Friday to the most anticipated report of the month: US nonfarm payrolls. The December release is expected to confirm what we already know about the labour market – that it is expanding firmly.
Market participants can expect a steady stream of economic data to be released in advance of the official US report. Action begins at 07:00 GMT with a report on German retail sales. Receipts at German retail stores are forecast to rise 1% month-on-month and 2.5% annually.
Reports on French consumer confidence and Italian retail sales will make their way through the market over the next two hours.
By 10:00 GMT, the European Commission’s statistical agency will report the December consumer price index (CPI). Annual inflation in the 19-member euro area is forecast to drop to 1.4% from 1.5% previously. So-called core inflation is projected to pick up to 1% from 0.9% in November.
At 8:30 GMT, the Department of Labor will issue its long-awaited December nonfarm payrolls report. The monthly data set is expected to show the creation of 190,000 nonfarm jobs last month, following a gain of 228,000 in November. The jobless rate is expected to hold steady at 4.1%, with average hourly earnings accelerating 0.3% month-on-month.
On Thursday, payrolls processor ADP Inc. said private-sector employment surged by 250,000 in December, with services employment driving the bulk of the gains. The figure was much higher than the 190,000 predicted by economists, and may have raised the stakes for Friday’s official data release.
However, solid payrolls data failed to lift the US dollar, which returned to multi-month lows against a basket of world currencies. The US dollar index (DXY) closed at 91.87 on Thursday, and was little changed at the start of Asian trade.
In addition to the non-farm payrolls report, investors can expect headline factory orders and ISM non-manufacturing PMI to be released later in the North American session.
North of the border, the Canadian government will also report on employment Friday. Canada’s jobless rate is expected to rise slightly to 6% in December from 5.9% previously.
The euro returned to strength on Thursday, with prices approaching the 1.2100 US handle. The uptrend peaked at 1.2086, and a clean break above this level is needed to confirm a bigger uptrend.
Pound sterling returned to positive territory on Thursday following a sharp correction the previous session. Cable was last seen trading at 1.3565, having gained 0.1%. The pair now faces immediate resistance at the weekly high of 1.3612.
The dollar resumed its uptrend against the yen on Thursday, as risk sentiment faded. The USD/JPY was last seen trading at 112.84, where it is holding above the 100-DMA. Prices are eyeing the short-term resistance of 112.90.