Daily Report: All Eyes on Non-Farm Payroll

Focus of the day is US non-farm payroll in December which is anticipated to have reduced by -550K (November: -533K) with severe drop in manufacturing and business services sectors. Although initial jobless claims reported yesterday fell 25K to 467K after a decline of 98K in the week before, it's probably skewed by holiday season. However, other indicators such as continuing claims and December's ADP employment released Wednesday (job loss: -693K vs -450K in consensus) came in much worse than expected. Unemployment rate in December would have risen to 7% for the first time since 1993. Average hourly earnings in December probably increased by 0.2% after gaining 0.4% in November.

More on NFP:

• US Expected To Lose More Than 1 Million Jobs In Just Two Months
• Why December Non-Farm Payrolls Could Rebound
• EUR/USD: Trading The US Change In Non-Farm Payrolls
• U.S. Preview: Record Declines Expected in December Nonfarm Jobs Report (Update)

Released in early European session, Germany retail sales rose 0.7% mom in Nov, dropped -3.0% yoy. Eurozone retail sales is expected to be unchanged mom in Nov, dropped -1.6% yoy.

Over the last 2 weeks, we have received weaker data in the UKmanufacturing sector: manufacturing PMI and BoE Agents' manufacturing output indicators all deteriorated sharply. Subject to downside risk, November's industrial production probably dropped -0.6% mom after falling -1.7% in October while manufacturing production should have contracted -0.7% mom after plunging -1.4% in the previous month. PPI in December is expected to have moderated further with core PPI came in at -0.3% mom, 4.6% yoy given decline in commodity prices. Producer input and output price inflation are expected to be -2.3% mom/2.8% yoy and -0.7% mom/3.8% yoy respectively. .

In Canada, unemployment is expected to have climbed to 6.5% with 21K more people losing jobs during the month. Property remains sluggish and housing starts should have only increased by 170K units (November: 172K) in December while building permits were down -5% in November.

USD/JPY Daily Outlook

Daily Pivots: (S1) 90.38; (P) 91.65; (R1) 92.46; More.

USD/JPY recovers mildly after diving to 90.84 and at this point, intraday bias remains on the downside as long as 92.02 minor resistance holds. Break of inner rising trend line support is taken as the first alert that whole rebound from 87.13 has completed after failing to sustain above 93.90 cluster resistance. Break of 90.14 will confirm this case. More importantly, this will leave such rebound in three wave corrective structure which is consistent with the medium term bearish view. Retest of 87.13 low should be seen in this case. On the upside, above 92.02 will turn intraday outlook neutral again and raise the odds the correction from 87.13 is not completed yet.

In the bigger picture, stronger than expected rebound from 87.13 dampens the near term bearish case. Considering bullish convergence conditions in daily MACD, whole fall from 110.66 might be completed and strong rally could be seen to 100.54 resistance and above. Meanwhile, note that there is still no clear indication of completion of whole down trend from 124.13 (07 high) yet. As long as medium term falling trend line resistance (124.13, 100.66, now at 106.29) remains intact, such down trend is still in favor to resume after completing the current rebound. Below 90.14 will leave the rebound from 87.13 with corrective three wave structure and will support the medium term bearish case.

Forex News Digest

• The Day Ahead Canada and US: U.S. Nonfarm Payrolls, Canadian Employment
• The Day Ahead Europe and UK: German and UK Industrial Production, UK PPI
• U.S. Preview: Record Declines Expected in December Nonfarm Jobs Report (Update)
• Japan's Leading and Coincident Indexes Fall Again
• South Korean Central Bank Cuts to Record Low As Expected
• Closing Market Recap: Stocks Flat, U.S. Dollar Down Ahead of Jobs Report
• Thursday's News Recap: U.S. Continuing Claims Soar, Canadian Mfg at Record Low
• Dollar Heading for Weekly Loss as Report May Show Jobless at 16-Year High
• Sell Australian Dollar on Commodities, Outlook for Interest Rate, ANZ Says
• Canada's Dollar Gains as U.S. Greenback Falls on Unemployment Claims Data
• Canadian Dollar to Underperform During Risk Aversion, RBS Greenwich Says
• Weber Says Germany's Economy May Contract More Than Bundesbank Forecasts
• Australian Dollar Set for First Weekly Loss in a Month on Economy Concerns

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