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Dollar Trying to Rebound after NFP, Lacks Momentum

Dollar is trying to rebound after non-farm payroll report but struggles to find sustainable buying. Headline NFP showed 156k growth in December, below expectation of 178k. Nonetheless, prior month’s figure was revised up from 178k to 204k. Unemployment rate rose to 4.7% as expected. Wages showed strong growth with average hourly earnings increased 0.4% mom, above expectation of 0.3%. Also from US, trade deficit widened to USD -45.2b in November. On the other hand, Canadian dollar rises on job data which showed an impressive 53.7k growth in December. Unemployment rate in Canada also rose to 6.9%. Canada trade balance turned into CAD 0.5b surplus in November.

Eurozone confidence indicators came in generally better than expectations. Business climate indicator rose to 0.79 in December, up from 0.41, above consensus of 0.47. Economic confidence rose to 107.8, up from 106.6, above consensus of 106.8. Industrial confidence rose to 0.1, up from -1.1, above consensus of -0.4. Services confidence rose to 12.9, up from 12.2, above consensus of 12.0. Consumer confidence rose to -5.1, up from -6.2, above expectation of -5.3. Eurozone retail sales dropped -0.4% mom in November, in line with expectations. German factory orders dropped -2.5% mom in November, retail sales dropped -1.8% mom.

Elsewhere, Swiss foreign currency reserves dropped to CHF 645b in December. Australia trade balance turned into surplus of AUD 1.24b in November, first surplus since 2014. Japan labor cash earnings rose 0.2% yoy in November.

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 114.56; (P) 115.99; (R1) 116.77; More…

USD/JPY recovers ahead of 114.76 support but stays in range below 118.65. Intraday bias remains neutral first. Outlook stays bullish with 114.76 intact and further rise is expected. Above 118.65 will extend the whole rise from 98.97 to 125.85 key resistance next. However, sustained break of 114.76 will confirm short term topping and bring deeper pull back to 55 day EMA (now at 112.76) and possibly below.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. The impulsive structure of the rise from 98.97 suggests that the corrective is completed and larger up trend is resuming. Decisive break of 125.85 will confirm and target 61.8% projection of 75.56 to 125.85 from 98.97 at 130.04 and then 135.20 long term resistance.

Economic Indicators Update

GMT Ccy Events Actual Consensus Previous Revised
00:00 JPY Labor Cash Earnings Y/Y Nov 0.20% 0.20% 0.10%
00:30 AUD Trade Balance (AUD) Nov 1.24B -0.55B -1.54B -1.12B
07:00 EUR German Factory Orders M/M Nov -2.50% -2.50% 4.90% 5.00%
07:00 EUR German Retail Sales M/M Nov -1.80% -0.90% 2.40%
08:00 CHF Foreign Currency Reserves Dec 645B 649B 648B
10:00 EUR Eurozone Business Climate Indicator Dec 0.79 0.47 0.42 0.41
10:00 EUR Eurozone Economic Confidence Dec 107.8 106.8 106.5 106.6
10:00 EUR Eurozone Industrial Confidence Dec 0.1 -0.4 -1.1
10:00 EUR Eurozone Services Confidence Dec 12.9 12 12.1 12.2
10:00 EUR Eurozone Consumer Confidence Dec F -5.1 -5.3 -5.1 -6.2
10:00 EUR Eurozone Retail Sales M/M Nov -0.40% -0.40% 1.10% 1.40%
13:30 CAD Trade Balance (CAD) Nov 0.5B -1.6B -1.1B -1.0B
13:30 CAD Net Change in Employment Dec 53.7K -5.0k 10.7k
13:30 CAD Unemployment Rate Dec 6.90% 6.90% 6.80%
13:30 USD Trade Balance Nov -45.2B -42.2B -42.6B -42.4B
13:30 USD Change in Non-farm Payrolls Dec 156K 178k 178k 204K
13:30 USD Unemployment Rate Dec 4.70% 4.70% 4.60%
13:30 USD Average Hourly Earnings M/M Dec 0.40% 0.30% -0.10%
15:00 USD Factory Orders Nov -2.30% 2.70%

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