Forex news for NY traders on January 6, 2017
- S&P/Nasdaq closes at a record high. Dow gets to within a whisker of Dow 20K
- CFTC commitment of traders reports: Small net changes in the current week
- JPMorgan cranks up fourth quarter GDP forecast after trade data
- USD/JPY reclaims 117.00. What's next
- Fed's Evans: I see two hikes this year as not unreasonable
- Fed's Harker: I've pencilled in 3 rate hikes this year
- Economist reactions to the US non-farm payrolls report
- Fed's Lacker: 'Upward adjustment needed' for Fed rate target
- Baker Hughes US oil rig count 529 vs 525 prior
- Fed's Evans: Current global economic climate is weak and uncertain
- Three trade entries from TD
- US dollar pushes higher. Kaplan comments/stocks helping
- Fed's Kaplan: There is probably additional labor market slack
- Fed's Kaplan (voter in 2017) says 2H 2016 was very strong
- Atlanta Fed GDPNow estimate 2.9%. Unchanged from prior estimate
- A good start to the first week of 2017 for European stocks
- US 30 year bond yield moves back above 3%
- NY Fed Nowcast GDP estimate for Q4 at 1.9%
- Canada Ivey PMI for December 60.8 (SA) vs 56.8 last month
- November 2016 US factory orders -2.4% vs -2.2% exp m/m
- US bond yields move higher after US jobs report
- Fed's Mester: Dec jobs report was a very decent report
- Data double-whammy sends Canadian dollar to three-week high
- Canadian November trade balance CAD +.0.53 bln vs -1.6bln exp
- US trade balance for November -45.2B vs. -45.4 billion estimate
- Canadian December employment +53.7K vs -2.5K expected
- December 2016 US non farm payrolls 156k vs 178k exp
- The snapshot of the strongest and weakest before the US employment
In other markets today:
- S&P index
- Nasdaq
- Dow industrial average
- Spot gold is trading at $1172 -8 dollars or 0.71%
- Crude oil futures are trading at $53.67, down $.10 or 0.17%
- US bond yields are higher with the two-year note up five basis points, and the 10 year note up 7.5 basis points
The US unemployment report was released today with nonfarm payroll increasing by 156K. This was lower than the 178K expected. However revisions to the prior month added 19K. Average hourly earnings increased by 0.4% for the month and 2.9% year on year. That is strong. The unemployment rate remained steady at 4.7%. but near full employment levels.
Overall it was a solid report and suggests that trends in employment continue to move forward.
In other US news, the US trade deficit increased to -45.2B from -42.4B last month. As the dollar goes higher, the trade deficit will likely continue the negative trend (sans a Trump effect). US factory orders fell by -2.4%. That decline washed out the 2.8% increase in October.
Canada also released employment with the net change in employment increasing by 53.7 K. This was much better than the -2.5 K estimate. Full-time employment added +81.3 K while part-time employment subtracted -27.6 K. The unemployment rate stayed steady at 6.9%. Overall a strong report. After a move higher in the CAD, the focus on the USD helped to turn the trend around.
Fed officials were commenting throughout the trading day today.
- Fed's Mester said the December report was a very decent report.
- Feds Kaplan said the Fed may have to be nimble to revise forecasts. He expects growth in the first half to be 2%.
- Feds Evans said the current global economic climate is weakened and uncertain, but said 2 rate hikes is not unreasonable and three could three could make sense.
- Fed's Lacker (a hawk) said upward adjustment needed for Fed rate target.
- Feds Harker said has penciled in three rate hikes this year.
Two or three rates hikes sounds a lot better than the 1 hike seen in 2015 and 2016. That helped to keep the USD supported.
For the day the USD was the strongest currency with the CAD just behind. The JPY was the weakest.
The USDJPY showed the largest gains. That pair rose steadily ahead of the report to about 116.40 and then more after the report to over 117.00 (high reached 117.17). The pair is closing near the 100 and 200 hour MA as 116.93 and 117.03. That is a nice neutral level given the recent trading trends. Next week we should see a move away.
The GBPUSD reversed the gains from yesterday (and a little more). The pair continues to find sellers on rallies as traders fear Article 50 in 2017 and the implications. The move lower technically took the price back below its 100 and 200 hour moving averages at 1.2312 and 1.22875 respectively. We are closing at around 1.2282 level. That gives a more bearish bias into the weekend.
The EURUSD was a little less negative (helped by a rising EURGBP). The price action today, took the price back below the 200 bar MA on the 4-hour chart at 1.0554 today. Since the November election, there have been 4 attempts to move above that MA level. The one yesterday and today was the strongest attempt (as far as time goes) but like the rest, the break failed. We are closing below the MA level. More bullish, is the pair remains above the 100 hour MA below at 1.0498 and the 200 hour MA at 1.0480 area. They (and the 200 bar MA above), will be key for traders next week.
For the week although the dollar recovered today, it was more down vs the majors (CAD, AUD, NZD, CNY, EUR, CHF) than up (JPY and GBP). However apart form the AUD and the CAD, most of the pairs had modest changes (see chart below)
The global stock markets are ending the week with nice gains to start the year. In the US the Nasdaq index led the way with a 2.56% increase. In Europe the Italy FTSE MIB was up 2.36%. The Nikkei was up 1.78% and the Hang Seng index rose by 2.28%
That will do it for the week. Wishing you all a good weekend and look forward to next week!
