Traders were stunned after the January nonfarm payroll report showed hiring accelerated. Employers added 467,000 jobs last month, almost doubling the highest economist estimate. The December reading was also massively revised higher, which means the Omicron wave did not deliver a temporary disruption to the labor market recovery.
Market participants were prepared for a weaker-than-forecast reading given the decline in the ADP U.S. private payrolls report released earlier this week. That report showed a decline due to the impact of the Omicron coronavirus variant.
Average hourly earnings, a measure of wage inflation and a closely watched metric, also rose 0.7% last month, and 5.7% on a year-on-year basis.
Dollar ended as the worst performing one even though it tried to strike a late come back. Yen was the second worst, followed by Canadian Dollar. Euro was the runaway winner, followed by Australian and then New Zealand Dollar. Sterling just ended mixed with Swiss.
In the next week, the upcoming inflation data is all that matters and could lead to markets fully pricing in a half-point rate hike for the Fed at the March policy meeting. The January inflation report is expected to be red hot as the omicron wave intensified supply constraints and consumer demand remained strong. German inflation on Friday will also be closely monitored.
Major Currencies Performance and Signals
EUR/USD
Focus next week will be on commentary coming from policymakers in regards to how soon we can expect an end of net asset purchases and, more importantly, what that means for interest rates this year. The EUR/USD price remains positive on the daily chart.
FORECAST: BUY
Resistance: 1.1500, 1.1550, 1.1600
Support: 1.1450, 1.1400, 1.1350
GBP/USD
Bank of England raised interest rates by 25 basis points to 0.5 percent. A surge in demand could push the GBP/USD price towards the next resistance level of 1.3598 or 1.3665. We are bullish on Cable.
FORECAST: BUY
Resistance: 1.3500, 1.3550, 1.3600
Support: 1.3450, 1.3400, 1.3350
AUD/USD
The Reserve Bank of Australia ended quantitative easing and kept rates on hold. Wall Street struggled to extend gains, but its neutral stance-maintained AUDUSD afloat. The Aussie could advance further according to near-term technical readings.
FORECAST: BUY
Resistance: 0.7100, 0.7150, 0.7200
Support: 0.7050, 0.7000, 0.6950
USD/JPY
The USDJPY managed to soar from the weekly lows of 114.15 and closed the week at 115.15. Poor ADP figures weighed on the USD but upbeat US NFP gave back the strength to the dollar. Market participants are looking at US inflation data next week.
FORECAST: BUY
Resistance: 115.50, 116.00, 116.50
Support: 115.00, 114.50, 114.00
USD/CAD
The Loonie ended the week up 0.10% to 1.2757 against the US Dollar. It’s a particularly quiet week ahead, with December trade data due out on Tuesday. With little else for the markets to consider, expect market risk sentiment and crude oil prices to also influence.
FORECAST: NEUTRAL
Resistance: 1.2800, 1.2850, 1.2900
Support: 1.2750, 1.2700, 1.2650
Warning:
Trading on CFDs involves a high level of risk, including full loss of your trading funds. Before proceeding to trade, you must understand all risks involved and acknowledge your trading limits, bearing in mind the level of awareness in the financial markets, trading experience, economic capabilities and other aspects.
Disclaimer:
Market Trends, Charts, Trading Ideas or other information provided by BKFX (Pty) Ltd and/or third parties are not intended as an investment advice and/or recommendation. The information provided is not presented as suitable or based on your specific need. You are responsible for your own investment decisions and you should not trade with money you cannot afford to lose. Any views or opinions presented in this Article are solely those of the author and do not necessarily represent those of the Company, unless otherwise specifically stated. The Company may provide the general commentary which is not intended as an investment advice and must not be construed as such. Seek advice from a separate financial advisor if an investment advice is needed. The Company assumes no liability for errors, inaccuracies or omissions, inaccuracies or incompleteness of information, texts, graphics, links or other items contained within this article/material.