US and Canadian job reports in focus today
With risk sentiment placated, market participants can refocus their attention back on economic data once again, and this afternoon's set of numbers do not come much bigger than the US non-farm payrolls report. Employment in the US continues to rise, though the pace of gains is being monitored to see to what level the economy is coming off the boil and whether this signals something more significant.
Fed policymakers overnight were resolute in saying that current policy rates are appropriate at the present time, with little need to tighten rates as inflation remains anchored. However, the market now wants to see whether there is any evidence to suggest that more rate cuts are possible this year, as some still believe to be the case.
Forecasts for today's headline number lie in the 160-170k range, though we need to see a number below 150k in order to prompt a negative reaction here. Similarly to the upside, north of 180k would perhaps set off fresh USD buying, with an adjustment higher already seen as reflected not only with USD/JPY back in the mid 109.00's, but EUR/USD also challenging 1.1100 again.
Earnings growth will also be watched keenly as any signs of this dropping off will signal muted price pressures going forward, and forecasters are looking for a rise of 0.3% over December to keep the annualised rate above 3.0%.
Jobs data is also due out in Canada where expectations are for a 25k rise over the same period. Recent months have seen these numbers deviate significantly from forecasts, so this can prompt sharp moves in the CAD, which in more recent episodes, has been responding to the sharp rise and fall in oil prices due to tensions in the Middle East.
We go back to fundamentals for now, and the CAD has also given up ground against the USD, with a relaxation in Oil price combining with a broader retracement in the USD.