USD/CAD has edged higher in the Friday session. Currently, the pair is trading at 1.3150. On the release front, there are no Canadian releases on the calendar. In the US, the focus is on employment numbers, led by Nonfarm Payrolls. The indicator is expected to jump to 170 thousand. At the same time, wage growth is forecast to edge down to 0.3%. Any unexpected readings from either of these key indicators could lead to volatility in the North American session.

There were no surprises from the Federal Reserve, but the markets still came away disappointed, which put pressure on the dollar. As expected, the Fed opted to maintain the benchmark interest rate at 0.50%. The markets were hoping for some hints about monetary policy from the rate statement, but the statement was more dovish than investors would have liked. The statement reiterated that the US economy is in good shape and that inflation continues to move towards the Fed's target of 2 percent. Analysts expect the Fed to raise rates two or three times in 2017, with the odds of a rate hike by June priced in at 70%. However, the post-election euphoria which sent the markets higher appears to have dissipated, as Trump's economic policy remains unclear, while his rhetoric remains controversial and undiplomatic. Trump has promised substantial fiscal spending and tax cuts, but hasn't provided any details. Just a few months ago, a red-hot US economy had led to the Fed loudly hinting at gradual rate increases in 2017. However, with the markets showing increasing uneasiness about the new Trump administration, the Fed will likely change gears and adopt a wait-and-see attitude in the coming months, watching what bills Trump is able to get through Congress and how the economy responds.

The Canadian dollar has raced out of the gates in 2017, gaining 2.8% in the month of January. Earlier this week, USD/CAD dropped to 1.2965, the pair's lowest level since September 5. Will the Canadian dollar rally continue in February? There was positive news about the Canadian economy on Tuesday, with the release of Canadian GDP. The economy expanded 0.4% in November, rebounding from a 0.3% decline in October. This figure beat the forecast of 0.3%, and the Canadian dollar moved higher. However, there could be trouble ahead for the Canadian economy, which is heavily reliant on its southern neighbor. A report by the National Bank Financial Markets says that if Donald Trump's administration implements protectionist policies, Canada's GDP could drop as much as 1.5 percent. Trump has declared he will renegotiate the NAFTA trade agreement, which could have negative repercussions for the Canadian economy. With 70% of Canadian exports headed for the US, any protectionist moves by Trump could unnerve the markets and send the Canadian dollar lower.

Market movers ahead

• In the US, the data calendar is light and we expect focus to remain on Donald Trump's policy. One game changer may be confirmation of Steven Mnuchin as Treasury Secretary.
• The main event in the UK next week is the House of Commons vote on the Article 50 bill on Wednesday. The vote is expected to be passed and put the government on course to trigger Article 50 on 9 March as planned.
• In the euro area, we expect to see a decline the Sentix index after it reached very high levels in January. Likewise, we expect to see a decline in German industrial production after a solid showing in the autumn.
• Chinese FX reserve data are likely to attract some attention, as we saw big movements in the Chinese currency in January.
• We expect next week's inflation figures from both Norway and Denmark to increase. In Denmark, this is due to base effects and rising food prices. In Norway, we do not expect the increase to last, as the effect of the NOK depreciation eases .

Global macro and market themes

• Data continues to look robust globally and most markets moved sideways.
• The USD continues to weaken, as Trump's team blames Germany, Japan and China for currency manipulation.
• Uncertainty remains high and a trade war could be brewing.
• We expect the USD to strengthen over coming months as more details on Trump's fiscal policy plans are revealed.

Full Report in PDF

Friday February 3: Five things the markets are talking about

Will the dollar get any relief from a strong non-farm payroll (NFP) report today?

Yesterday, the dollar fell to its lowest level in more than two-months across the board, as doubts grow about whether Trump's administration would prioritize promises to cut taxes and boost fiscal spending.

Many remain concerned that he is perhaps focusing too much on trade issues and diplomatic matters, rather than the promised tax reductions and infrastructure spending that fuelled the Trumponomic trade since last November.

Despite central bank decisions having dominated the financial markets all week, policy makers' direct influence on asset prices is beginning to wane as investors become sensitive to more genuine drivers that influence productivity, trade and corporate investment. Today its non-farm payroll (NFP) and market expectations anticipate a +180k print for January (08:30am EST). Again, the focus on the jobs report will center on wage pressures.

1. Global equities a mixed bag ahead of NFP

In Japan, the Nikkei ended flat in choppy trade as investors awaited the release of NFP - this will set the tone for the Fed's policy outlook. The benchmark index has fallen -2.8% this week.

In Hong Kong, stocks suffered their fourth consecutive session of declines amid uncertainty over global growth and fresh signs of policy tightening in China - the Hang Seng index fell another -0.2%, for the week, the index has dropped -1%.

In China, stocks snapped their five-day winning streak after Beijing unexpectedly raised short-term interest rates on the first trading day after the Lunar New Year holiday, in a further sign it has moved to a tightening policy bias. The Shanghai Composite Index lost -0.6%.

Note: The PBoC raised money market rates by +10bps, and reinforced their views that they are opting for a "prudent and neutral" monetary policy stance this year. They also raised rates on short-term lending facility (SLF) loans.

In Europe, equity indices are trading higher ahead of the U.S employment data. Financial stocks again are leading the gains across in the Eurostoxx 60 on higher global yields. Commodity and mining stocks are weighing in the FTSE 100.

U.S equities are set to open a tad higher (+0.1%).

Indices: Stoxx50 +0.3% at 3,268, FTSE +0.4% at 7,168, DAX +0.1% at 11,637, CAC-40 +0.7% at 4,827, IBEX-35 +0.4% at 9,440, FTSE MIB +0.6% at 19,002, SMI +0.6% at 8,328, S&P 500 Futures +0.1%

2. Oil higher on geopolitics, gold profits booked

Ahead of the U.S open, oil prices are higher on news that Trump could be set to impose new sanctions on multiple Iranian entities following Tehran's ballistic missile test.

Also, Russian comments that their domestic oil producers had cut their output in accordance with a pact agreed in December is also supporting prices.

Brent crude is up +45c, or +0.8%, to +$57.01 a barrel (or +2.6% this week), while U.S. WTI has climbed +48c, or +0.9%, to +$54.02 a barrel (up a little over +1% this week).

Note: Market consensus expects oil prices to average around the mid- to high $50's in Q1 and Q2.

In metals, ahead of U.S. jobs data it seems that investors are happy to book some gold profits after the metal hit an 11-week high yesterday ($1,225.30). Prices have slipped -0.3% to +$1,212.91 overnight as the dollar outperforms the yen after Japan offered to buy government bonds. The precious metal is up +1.8% this week.

3. BoJ disappoint in bond repurchases, China raises rates

Government bonds on both sides of the Atlantic strengthened yesterday after the BoE signalled it was in no rush to tighten monetary policy despite a recent pickup in inflation. Governor Carney is prepared to tolerate a long spell of above-target inflation to support the economy as the U.K. charts its exit from the EU.

The yield on the benchmark 10-year U.S. Treasury note is trading atop of +2.439%. The yield on the 10-year U.K. gilt has dropped to +1.374% from +1.460% before the BoE decision, while the yield on the 10-year German bund has declined to +0.420%.

In Japan, the BoJ conducted another fixed-rate JGB operation.

Nevertheless, dealers' confidence in the BoJ's capability to hold down rates is beginning to wane, especially as Japanese policy makers offered only a 'limited' expansion of debt purchases in a regular operation - this sent both the yen (¥112.36) and JGB yields higher.

Japan's 10-year yield surged as much as +4bps to +0.15%, the highest since the BoJ implemented its negative-rate policy in January 2016. Expect the market to continue to focus on whether the BoJ will deliver further to rein in the rise in yields.

4. Sterling falls after disappointing data

The pound (£1.2488) has turned lower this morning after a weaker-than-expected PMI for services - which makes up a substantial proportion of U.K. economic activity - fell to 54.5 last month from 56.2 in December. Consensus was expecting a print of 55.8. The euro has rallied to €0.8611, up +0.15%.

Elsewhere, the 'big' dollar is trying to find some strength from its recent losses. The EUR/USD (€1.0741) is little changed despite numerous ECB and German official downplaying the recent pick-up in inflation data. USD/JPY is a tad higher, up +0.3% and holding above the psychological ¥113 level.

5. Pan Asian PMI's a slight disappointment

Overnight, the PMI reports for China, Honk Kong and Australia were all slightly disappointing.

China's Caixin PMI was in expansion for the seventh consecutive month (51.0 vs. 51.8e), but missed consensus amid a slower increase in output and new order activity as well as reduction in employment.

After last month's jump in Hong Kong PMI to expansion, the figure was back below the 50-threshold (49.9 vs. 50.3 - in contraction for the 22nd out of 23-months) - also in contraction was output, new orders, and falling business confidence. Employment, however, saw some marginal improvement.

In Australia, services PMI slowed to 54.4 from multi-year high of 57.7 last month, but remains in expansion for the fourth successive month. Further evidence of a strong Aussie economy (this week's record high trade surplus) has put the probability of an RBA rate hike this year somewhere at +40% and rising.

USD/JPY has edged higher in the Friday session, crossing above the 113 level. Currently, the pair is trading at 113.16. On the release front, the Bank of Japan released the minutes of its December meeting. n the US, the focus is on employment numbers, led by Nonfarm Payrolls. The indicator is expected to jump to 170 thousand. At the same time, wage growth is forecast to edge down to 0.3%. Any unexpected readings from either of these key indicators could lead to volatility in the North American session.

There were no surprises from the Federal Reserve, but the markets still came away disappointed, which put pressure on the dollar. As expected, the Fed opted to maintain the benchmark interest rate at 0.50%. The markets were hoping for some hints about monetary policy from the rate statement, but the statement was more dovish than investors would have liked. The statement reiterated that the US economy is in good shape and that inflation continues to move towards the Fed's target of 2 percent. Analysts expect the Fed to raise rates two or three times in 2017, with the odds of a rate hike by June priced in at 70%. However, the post-election euphoria which sent the markets higher appears to have dissipated, as Trump's economic policy remains unclear, while his rhetoric remains controversial and undiplomatic. Trump has promised substantial fiscal spending and tax cuts, but hasn't provided any details. Just a few months ago, a red-hot US economy had led to the Fed loudly hinting at gradual rate increases in 2017. However, with the markets showing increasing uneasiness about the new Trump administration, the Fed will likely change gears and adopt a wait-and-see attitude in the coming months, watching what bills Trump is able to get through Congress and how the economy responds.

Just two weeks into his presidency, President Donald Trump has not hesitated to butt heads with foreign leaders. Earlier this week it was the turn of Japan, as Trump accused Japan of currency devaluation in order to gain an unfair trade advantage from a weaker yen. Japan flatly denied the claim of currency manipulation, saying that Japan's monetary policy was aimed at curbing deflation and not lowering the value of the yen. Trump and Japanese Prime Minister Shinzo Abe will meet in Washington on February 10, and it's a sure thing that currency policy will be high up the list on the agenda of the meeting. The BoJ sent off its own warning about currency manipulation when the dollar pushed above the 120 level, but BoJ Governor Haruhiko Kurodo recently stated that the bank does not have a target for the currency. It's a safe bet that we haven't seen the last of the war of words between the US and Japan with regard to currency policy.

Central Bank maneuvers/rhetoric highlighting policy divergence tactics

Notes/Observations

ECB members stress that Europe is not aiming for early rate hikes

BOJ underlined its commitment to control the JGB yield curve

China PBoC raised short-term interest rates in fresh tightening signal; reiterates its prudent policy stance

Major European Services PMI generally improve in Jan (Beats: France, Germany, Euro Zone, Russia, Miss: UK)

Turkey CPI hits a 1-year high at 9.2% v 8.6%e (compares to 5% target)

Overnight:

Asia:

China PBoC raises short-term interest rates in fresh tightening signal (reverse repos and SLF operations)

BOJ again conducts a fixed-rate JGB purchase operation for the 2nd time under its new policy framework after 10-year JGB yield climbed to 0.15% (move seen as attempt to control yield curve)

BOJ Monetary Policy Dec. 19-20 Meeting Minutes (two meeting ago) reiterated that it should use powerful monetary easing as still long way to reach price target

China Jan Caixin Manufacturing PMI missed expectations but still registered its 7th consecutive expansion (51.0 v 51.8e)

Europe:

ECB's Coeure (France) reiterated Council view that ECB stimulus is clearly working; did not react to short term fluctuations (refers to higher inflation data)

ECB's Praet (Belgium) stressed that the current environment still fell short of a sustained adjustment in the path towards 2% inflation

Americas:

White House stated that US was not easing sanctions on Russia and no change in policy at this time (comments made after US Treasury noted it would make sanctions exceptions for some transactions with Russian intelligence agency)

US reportedly planned to impose more sanctions on Iran as early as Friday which would not violate Iran nuclear deal (imposed partly due to recent Iran ballistic missile test)

Economic data

(IN) India Jan PMI Services: 48.7 v 46.8 prior, PMI Composite: 49.4 v 47.6 prior

(IE) Ireland Jan Services PMI: 61.0 v 59.1 prior, Composite PMI: 59.3 v 58.4 prior

(RU) Russia Jan PMI Services (beat): 58.4 v 55.8e (12th month of expansion and highest since Dec 2008), PMI Composite: 58.3 v 56.6 prior

(TR) Turkey Jan CPI (beat) M/M: 2.5% v 1.8%e; Y/Y: 9.2% (1-year high) v 8.6%e; CPI Core Y/Y: 7.7% v 7.6%e

(ZA) South Africa Jan PMI (Whole Economy): 51.3 v 51.6 prior

(SE) Sweden Jan PMI Services: 61.1 v 59.0e

(ES) Spain Jan Services PMI (miss): 54.2 v 54.7e (39th month of expansion), Composite PMI: 54.7 v 55.1e

(SE) Sweden Dec Industrial Production M/M: -1.8% v +0.5%e; Y/Y: -0.9% v 2.7%e

(IT) Italy Jan Services PMI (miss): 52.4 v 52.5e (8th month of expansion), Composite PMI: 52.8 v 53.0e

(FR) France Jan Final Services PMI: 54.1 v 53.9e (confirmed 7th month of expansion), Composite PMI: 54.1 v 53.8e

(DE) Germany Jan Final Services PMI: 53.4 v 53.2e (confirms 43rd month of expansion), Composite PMI: 54.8 v 54.7e

(EU) Euro Zone Jan Final Services PMI: 53.7 v 53.6e (confirms 43rd month of expansion, Composite PMI: 54.4 v 54.3e

04:00 (NO) Norway Jan Unemployment Rate: 3.2% v 3.2%e

(UK) Jan Services PMI: 54.5 v 55.8e (6th month of expansion), Composite PMI: 55.5 v 56.0e

(EU) Euro Zone Dec Retail Sales M/M: -0.3% v +0.3%e; Y/Y: 1.1% v 1.8%e

(IT) Italy Jan Preliminary CPI (including tobacco) M/M: 0.2% v 0.3%e; Y/Y: 0.9% v 0.9%e

Fixed Income Issuance:

(IN) India sold total INR110B vs. INR110B indicated in 2024, 2029, 2033 and 2051 bonds

(ZA) South Africa sold total ZAR900M vs. ZAR650M indicated in I/L 2025, 2033 and 2046 bonds

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Index snapshot (as of 10:00 GMT)

Indices [Stoxx50 +0.3% at 3,268, FTSE +0.4% at 7,168, DAX +0.1% at 11,637, CAC-40 +0.7% at 4,827, IBEX-35 +0.4% at 9,440, FTSE MIB +0.6% at 19,002, SMI +0.6% at 8,328, S&P 500 Futures +0.1%]

Market Focal Points/Key Themes: European equity indices are trading higher ahead of US employment data scheduled later today; Financial stocks leading the gains across the board; Italian FTSE MIB outperforming as shares of Telecom Italia trade notably higher ahead of their earnings, peripheral lenders also adding to gains in the index; Commodity and mining stocks weighing in the FTSE 100 as copper and oil prices trade sharply lower intraday.

Upcoming scheduled US earnings (pre-market) include AutoNation, Apollo Global Management, Berry Plastics, Clorox, Hershey Foods, LyondellBasell, Madison Square Garden, Philips 66, and Regis Corp.

Equities (as of 09:50 GMT)

Consumer Discretionary: [Bechtle BC8.DE -0.2% (prelim FY16 results)]

Financials: [Banco Popular POP.ES -6.4% (Q4 results), VIEL & Cie VIL.FR -0.5% (FY16 sales)]

Industrials: [Hexpol HPOLB.SE +7.2% (Q4 results), Metso MEO1V.FI -5.4% (Q4 results, outlook), Michelin ML.FR +2.8% (raising European tyre prices ~8%), Skanska SKAB.SE +4.8% (FY16 results, invests in Seattle office project)]

Materials: [Haydale Graphene HAYD.UK +0.3% (Everpower to make strategic investment, trading update)]

Speakers

BOE's Broadbent reiterates MPC view that UK consumers to face a more challenging environment in 2017

German Bundesbank chief economist Ulbrich saw no reason to reduce ECB's stimulus for now with euro zone core inflation still far below ECB target

Indonesia Central Bank: To maintain current free capital regime; no plans to change it

China PBoC Dep Gov Zhang Xiaohui noted that prudent monetary policy needed to be more neutral and sought balance between economic growth and risk prevention

Currencies

Policy divergence back on the table in FX

USD trying to muster up some strength from its recent losses. Dealers noting that the recent Fed statement failed to send a signal to turn March into a ‘live meeting' as a catalyst for the current headwinds. Nonetheless the Fed remains on track to hike several time during the year.

The EUR/USD was little changed despite numerous ECB and German official downplaying the recent pick-up in inflation data. The pair just below 1.0750 level

The USD/JPY was higher by 0.3%and holding above the 113 level. BOJ again conducted a fixed-rate JGB purchase operation for the 2nd time under its new policy framework after 10-year JGB yield climbed to 0.15% (move seen as attempt to control yield curve)

Fixed Income:

Bund futures trade at 162.10 down 27 ticks as Equities rise with European Services PMI coming slightly mixed, but continued to mark expansion across the Eurozone. A continued move lower sees resistance initially at 161.96, 161.49 then 161.19 followed by 160.80. Resistance lies at 162.56 then 163.01 followed by 163.38.

Gilt futures trade at 124.02 down 19 ticks retracing some of the move higher yesterday following the BoE rate decision. Futures have come off lows on the back of slightly weaker Services PMI data. Support moves to 123.58 , 123.17 with Dec low at 122.08 the eventual target. Resistance moves to 124.53 then 124.73. Short Sterling futures trade flat with Jun17Jun18 continuing to flatten trading at 23/24bp.

Friday's liquidity report showed Thursday's excess liquidity rose to €1.311T up €10B from €1.301T prior. Use of the marginal lending facility rose to €107M from €97M prior.

Corporate issuance saw $11.5B come to market via 3 deals headlined by another large offering, this time from Apple selling a 9 part $10B issue. This puts weekly issuance to $43.3B, which largely comprised of 3 names. For the week ending Feb 1st Lipper US fund flows reported IG fund net inflows of $2.66B bringing YTD inflows to $12.36B, High Yield funds reported inflows of $412.6M bringing YTD inflows to $290.7M.

Looking Ahead

05:30 (RU) Russia Central Bank (CBR) Interest Rate Decision: Expected to leave 1-Week Auction Rate unchanged at 10.00%

06:00 (IE) Ireland Dec Industrial Production M/M: No est v 16.3% prior; Y/Y: No est v 14.1% prior

06:00 (UK) DMO to sell combined £4.0B in 1-month, 3-month and 6-month bills (£0.5B, £1.0B and £2.0B respectively)

06:30 (IN) India Weekly Forex Reserves

06:30 (CL) Chile Central Bank (BCCh) Jan Minutes - 06:45 (US) Daily Libor Fixing

07:00 (BR) Brazil Jan PMI Services: No est v 45.1 prior, PMI Composite: No est v 45.2 prior

07:00 (RU) Russia Central Bank (CBR) Gov Nabiullina to hold post rate decision press conference

08:15 (UK) Baltic Dry Bulk Index

08:30 (US) Jan Change in Nonfarm Payrolls: +180Ke v +156K prior, Change in Private Payrolls: +175Ke v +144K prior, Change in Manufacturing Payrolls: +5Ke v +17K prior

08:30 (US) Jan Unemployment Rate: 4.7%e v 4.7% prior, Underemployment Rate: No est v 9.2% prior, Change in Household Employment (civilian labor force): No est v +159.7K prior, Civilian Labor Force Participation Rate: No est v 62.7 prior

08:30 (US) Jan Average Hourly Earnings M/M: 0.3%e v 0.4% prior; Y/Y: 2.8%e v 2.9% prior; Average Weekly Hours: 34.3e v 34.3 prior

09:00 (MX) Mexico Jan Consumer Confidence: 83.5e v 85.7 prior

09:00 (MX) Mexico Nov Gross Fixed Investment: 2.5%e v -0.9% prior

09:45 (US) Jan Final Markit Services PMI: No est v 55.1 prelim, Composite PMI: No est v 55.4 prelim

10:00 (US) Jan ISM Non-Manufacturing Composite: 57.0e v 57.2 prior

10:00 (US) Dec Factory Orders: +0.5%e v -2.4% prior, Factory Orders (Ex Transportation): No est v 0.1% prior

10:00 (US) Dec Final Durable Goods Orders: %e v -0.4% prelim; Durables Ex Transportation: No est v 0.5% prelim; Capital Goods Orders (Non-defense ex aircraft): No est v 0.8% prelim Capital Goods Shipments (Non-defense/ex-aircraft): No est v 1.0% prelim, Durables Ex-Defense: No est v 1.7% prelim

12:00 (CO) Colombia Central Bank Quarterly Inflation Report

13:00 (US) Weekly Baker Hughes Rig Count data

14:00 (CO) Colombia Jan Total PPI Y/Y: No est v 2.2% prior; Domestic PPI M/M: No est v 1.6% prior

Weekend:

(CO) Colombia Jan CPI M/M: No est v 0.4% prior; Y/Y: No est v 5.8% prior

EUR/USD

Current level - 10757

The intraday outlook is negative below 1.0800 area, for a slide towards 1.0620 lows.

Profit-taking affects gold curbing silver and platinum

USD/JPY

Current level - 113.06

My outlook here is positive after yesterday's dip to 112.00, for a rise towards 114.00 key hurdle.

GBP/USD

Current level - 1.2520

A reversal has been confirmed at 1.2705 and the bias is negative, for a slide towards 1.2415. Key intraday resistance lies at 1.2610.

News and Events:

BoJ struggles to control the curve

Today's movement in Japanese sovereign rates is a clear case of markets testing the BoJ's commitment to sustainable monetary policy, just days after they reaffirmed their total commitment to the strategy. In order to boost the weak Japanese economy, the BoJ has gone beyond negative interest rates and quantitative easing and into yield curve control. Generally, central bank policy is limited to the short end of the curve but the fearless BoJ has ventured out to 10 years in order to control the steepening of the yield curve. The BoJ has committed to keep out to 10 years between -.10% and zero. In our view, this desperate attempt indicates central bank exhaustion rather than policy innovation. Following a smaller than expected bond purchase operation of jpy450bn 10-year, JGB sold off peaking at 15bp (above +/-10bp range from zero target). The BoJ quickly stepped back into the markets with unlimited purchases pushing rates back into the top of the target range. USDJPY reacted accordingly, swiftly dropping to 112.51 before the BoJ stabilised prices, sending the pair back towards 113.20. Much of the JPY weakness is defined by a weakness in JP rates (in US-JP yield spread relationship), therefore volatility in JGBs will have traders questioning the BoJ's long-term strategy and policy sustainability. We continue to see JPY grinding higher as US rates stagnate. However, in the short term, investors will focus on US President Trump and PM Abe's meeting next week. Foreign relations remain uncertain and accusations over FX manipulation will make this a headline-packed event.

China tightens policy

China’s Caixin PMI Manufacturing came in at 51.0, marginally below expectations of 51.8. The reading, which focused on smaller corporates, had limited embedded information. Elsewhere, following the increase in the mid-term leading facility rates prior to the Lunar New Year’s holidays, the PBoC today hiked the short-term market interest rate. The PBoC increased the reverse repo rates and rates on funds lending in SOF. This tightening action was initiated to offset sustained capital flight and the growth asset bubble. Higher rates in the short and medium term should lessen selling pressure on CNY and ease, but not stop, capital outflows. The recent disappearance of a prominent Chinese businessman in Hong Kong has highlighted investor discomfort with current Beijing policy, protracting steady capital migration out of China.

NFPs release will be non-event for dollar (by Yann Quelenn)

Today is the first nonfarm payrolls of the year. The week was busy and the Fed left rates unchanged as was much expected. Over the last year, we have witnessed financial markets shift their attention from economic data to central banks and now, Donald Trump. Every one of his tweets has the potential of changing market expectations and asset pricing as all eyes scrutinise his every move. This is why the dollar should not move much today amid the release of the jobs data.

The strong January ADP report on Wednesday, which rose 246k in January, is driving expectations higher. Markets expect today’s NFPs to indicate an additional 180k jobs and that the unemployment rate remains steady at 4.7%.

As Trump has mentioned several times, growth is one of his main concerns. A good read today would confirm the ongoing momentum of the US economy but this is in no way a reflection of his policies. It is worth saying that economic data in Europe and Japan has shown a solid trend of improvement over the last six months. Global environment conditions are improving.

Today's Key Issues (time in GMT):

• 4Q UBS Real Estate Bubble Index, last 1,35, rev 1,34 CHF / 07:00
• Jan Swedbank/Silf PMI Services, exp 59, last 59,9 SEK / 07:30
• Dec Industrial Production MoM, exp 0,50%, last 1,20%, rev 1,10% SEK / 08:30
• Dec Industrial Production NSA YoY, exp 2,70%, last 0,10%, rev -0,10% SEK / 08:30
• Dec Industrial Orders MoM, last 0,00%, rev 0,50% SEK / 08:30
• Dec Industrial Orders NSA YoY, last -3,10%, rev -2,80% SEK / 08:30
• Dec Service Production MoM SA, exp 0,50%, last 0,40% SEK / 08:30
• Dec Service Production YoY WDA, exp 1,50%, last 3,70%, rev 3,50% SEK / 08:30
• Jan F Markit Eurozone Services PMI, exp 53,6, last 53,6 EUR / 09:00
• Jan F Markit Eurozone Composite PMI, exp 54,3, last 54,3 EUR / 09:00
• Jan Unemployment Rate, exp 3,20%, last 2,80% NOK / 09:00
• Jan Markit/CIPS UK Services PMI, exp 55,8, last 56,2 GBP / 09:30
• Jan Markit/CIPS UK Composite PMI, exp 56, last 56,7 GBP / 09:30
• Jan Official Reserves Changes, last 2,90E+07 GBP / 09:30
• Dec Retail Sales MoM, exp 0,30%, last -0,40% EUR / 10:00
• Dec Retail Sales YoY, exp 1,80%, last 2,30% EUR / 10:00
• Norway Jan. House Price Statistics NOK / 10:00
• Revisions: Establishment Employment Survey Data USD / 13:30
• Jan Change in Nonfarm Payrolls, exp 180000, last 156000 USD / 13:30
• Jan Change in Private Payrolls, exp 175000, last 144000 USD / 13:30
• Jan Change in Manufact. Payrolls, exp 5000, last 17000 USD / 13:30
• Jan Unemployment Rate, exp 4,70%, last 4,70% USD / 13:30
• Jan Average Hourly Earnings MoM, exp 0,30%, last 0,40% USD / 13:30
• Jan Average Hourly Earnings YoY, exp 2,80%, last 2,90% USD / 13:30
• Jan Average Weekly Hours All Employees, exp 34,3, last 34,3 USD / 13:30
• Jan Labor Force Participation Rate, last 62,70% USD / 13:30
• Jan Underemployment Rate, last 9,20% USD / 13:30
• Jan F Markit US Services PMI, last 55,1 USD / 14:45
• Jan F Markit US Composite PMI, last 55,4 USD / 14:45
• Jan ISM Non-Manf. Composite, exp 57, last 57,2, rev 56,6 USD / 15:00
• Dec Factory Orders, exp 0,50%, last -2,40% USD / 15:00
• Dec Factory Orders Ex Trans, last 0,10% USD / 15:00
• Dec F Durable Goods Orders, last -0,40% USD / 15:00
• Dec F Durables Ex Transportation, last 0,50% USD / 15:00

The Risk Today:

EUR/USD's momentum has increased sharply. Closest hourly resistance area is given at around 1.0800. Hourly support lies at 1.0590 (19/01/2016 low) and 1.0341 (03/01/2017 low). Expected to see continued consolidation. In the longer term, the death cross late October indicated a further bearish bias. The pair has broken key support given at 1.0458 (16/03/2015 low). Key resistance holds at 1.1714 (24/08/2015 high). Expected to head towards parity

GBP/USD's buying pressures are increasing despite ongoing consolidation. The pair is on the road towards 1.2771 (05/10/2016 high). The technical structure is still anyway showing positive potential. Hourly support is given at 1.2466 (30/01/2016 low). Expected to show further bullish move. The long-term technical pattern is even more negative since the Brexit vote has paved the way for further decline. Long-term support given at 1.0520 (01/03/85) represents a decent target. Long-term resistance is given at 1.5018 (24/06/2015) and would indicate a long-term reversal in the negative trend. Yet, it is very unlikely at the moment.

USD/JPY had surprisingly exited the downtrend channel after monitoring resistance implied by the upper bound. Hourly resistance is given at 115.62 (19/01/2016 high). The technical structure suggests further momentum. as the break of hourly support given at 112.57 (17/01/2017 low) has confirmed bearish pressures. We favor a long-term bearish bias. Support is now given at 96.57 (10/08/2013 low). A gradual rise towards the major resistance at 135.15 (01/02/2002 high) seems absolutely unlikely. Expected to decline further support at 93.79 (13/06/2013 low).

USD/CHF's momentum is definitely bearish. Key resistance is given at a distance at 1.0344 (15/12/2016 high). The road is clearly wide-open for further decline. In the long-term, the pair is still trading in range since 2011 despite some turmoil when the SNB unpegged the CHF. Key support can be found 0.8986 (30/01/2015 low). The technical structure favours nonetheless a long term bullish bias since the unpeg in January 2015.

'While the EUR/USD rally on the daily chart has lots of bear bars and bear scalpers have been making money, it is relentless. It is testing the December 8 lower high.' – Al Brooks, Brooks Price Action (based on investing.com)

Pair's Outlook

Due to falling below the weekly R1 at 1.0761 against the US Dollar, the common European currency began Friday's trading session just below that level. The currency exchange rate remained unchanged during the morning hours. However, from a technical perspective by looking at the daily chart the pair had no support until the level of 1.0709, where the weekly PP is located at. It is most likely that there are other support levels on different timeframes, which will hinder the fall of the Euro. Although, the pair will still most likely reach the weekly PP.

Traders' Sentiment

SWFX traders have not changed their opinion regarding the pair, as 56% of open positions remain short. In the meantime, 58% of trader set up orders are to sell the Euro.

'I still think that 1.30 is the level that the cable may be aiming for. My bullish outlook on the GBP/USD would become weak if the sellers now manage to reclaim the broken resistance level at 1.2415.' – Fawad Razaqzada, analyst at Forex.com (based on PoundSterlingLive)

Pair's Outlook

Thursday ended with the Cable falling significantly below the anticipated 1.26 level. The immediate support, namely the weekly PP at 1.2532, was crossed yesterday, which is now acting as the nearest resistance. Today's GBP/USD driver will be the US NFP data, a strong reading of which is likely to cause the exchange rate to drop lower. The 1.24 level will then be the main target, as a tough demand cluster is located there, which is capable of limiting the losses. On the other hand, disappointments in US fundamentals could help the Sterling erase most of Thursday's losses, with the resistance around 1.2680 preventing the Pound from climbing further up.

Traders' Sentiment

There are 60% of traders holding long positions today (previously 59%), whereas 53% of all pending orders are to sell the British currency.

'We're still seeing long-term guys buying the dollar on dips, expecting it to eventually recover on interest rate differentials between Japan and the US. But sometimes, it's a short-term market.' – Global-info Co (based on Market Watch)

Pair's Outlook

There were no surprises in the USD/JPY pair's performance yesterday, as the 112.60 psychological support remained intact in spite of the Yen taking the upper hand. From the technical perspective the Buck should now rebound, but with gains being capped around the 114.50 mark, where the monthly and the weekly PPs rest, as well as the 20 and the 55-day SMAs. A strong US NFP reading today could also indicate to a possible rate hike as early as in March, providing the US Dollar with a solid boost. However, technical indicators insist a bearish development is more probable, with the only strong support being the area around 110.25.

Traders' Sentiment

Traders retain a positive outlook towards the Buck, as 61% of all open positions are now long, compared to 53% on Thursday.