It's been mixed start to trading at the beginning of the week as Friday's jobs data continues to sink in and investors wait to see what Donald Trump does next.

The new US President has been extremely active since his inauguration which has kept investors on their toes given the combination of market friendly and unfriendly policies that got him elected. Deregulation was the latest target for the President which provided a big boost to financial stocks on Friday as he aims to undo some of the regulatory burden created by Dodd-Frank following the financial crisis.

The unpredictable nature of Trump though makes it very difficult to anticipate what his next moves will be, as evidenced by his actions a week ago on immigration. This may ensure for now at least that while markets have remained volatile, a more cautious approach will be adopted during the bedding in period. It's a rather quiet week from the perspective of central bank decisions and economic data which will likely feed into this as well. Earnings season may provide a distraction for investors with almost one in five S&P 500 companies due to report on the fourth quarter.

Friday's jobs report didn't exactly leave us any-the-wiser on the health of the US economy, despite the number of jobs being created in January far exceeding expectations. Unemployment ticked higher as participation rose, which was one of the more positive aspects of the report, even if the headline number would perhaps suggest otherwise.

The earnings component of the report was the biggest disappointment, with annual growth falling back to 2.5% from 2.9% in December.

The inflation side of the Fed's dual mandate remains a barrier to the central bank raising interest rates three times this year, as it signaled in December it intends to. For inflation to run sustainably in line with the Fed's target, wage growth needs to improve and so Friday's report may be seen as more of a setback, despite impressive job creation. Investors clearly took it that way as near term rate hike expectations took another hit, with the market implied probability of a March rate hike now down to just 13%. June is still seen as the most likely meeting for the next increase, with markets pricing in a 68% chance currently.

Euro trades mildly softer today in rather quiet markets. Eurozone Sentix investor confidence dropped to 17.4 in February, down from 18.2, but beat expectation of 17.4. Sentix noted in the release that "investors are reacting to Donald Trump's first official acts and see in these a burden for the global economy." Eurozone PMI dropped 0.3 pt to 50.1 in January. German factory orders rose 5.2% mom in December, versus expectation of 0.7% mom. German finance minister Wolfgang Schäuble blamed ECB for making Euro's exchange rate "too low" and monetary polices that are "too loose" for Germany. He said that "when ECB chief Mario Draghi embarked on the expansive monetary policy, I told him he would drive up Germany's export surplus.... I promised then not to publicly criticise this [policy] course. But then I don't want to be criticized for the consequences of this policy."

The British Chambers of Commerce said today that depreciation in the exchange rate of Sterling has been a "double edged sword" for many UK businesses. And, "nearly as many exporters say the low pound is damaging them as benefiting them." And "or firms that import, it's now more expensive, and companies may find themselves locked into contracts with suppliers and unable to be responsive to currency fluctuations." Also, " inflation is going to be an important concern for businesses over the coming year." According to the survey in BCC poll, nearly half of 1500 companies said decline in Pound had a negative impact of domestic sales margins, 25% said it had positive impact on export margins, 22% said it had negative impact of export margin.

Elsewhere, Japan labor cash earnings rose 0.1% yoy in December, below expectation of 0.4% yoy. Australia retail sales dropped -0.1% mom in December versus expectation of 0.3% mom growth. China Caixin PMI services dropped 0.3 pt to 53.1 in January.

Aussie drops mildly today after much weaker than expected data. But it's staying as the strongest major currency for the month so far. RBA rate decision will be a focus in the upcoming Asian session. It's widely expected the central bank will keep interest rate unchanged at 1.50%. Nonetheless, more attention would indeed be on the monetary policy statement on Friday, which would give more information on how RBA views recent patch of soft data.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.0729; (P) 1.0763 (R1) 1.0818; More.....

EUR/USD weakens mildly today but stays in range of 1.0619/0828. Intraday bias remains neutral first. As noted before, choppy rise from 1.0339 is seen as a correction. Hence, in case of another rise, upside should be limited by 1.0872 resistance and bring fall resumption eventually. Break of 1.0619 will turn bias to the downside for retesting 1.0339 low.

In the bigger picture, whole down trend from 1.6039 (2008 high) is in progress. Such down trend is expected to extend to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. On the upside, break of 1.1298 resistance is needed to confirm medium term bottoming. Otherwise, outlook will stay bearish in case of rebound.

Economic Indicators Update

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Daily Pivots: (S1) 1.0729; (P) 1.0763 (R1) 1.0818; More.....

EUR/USD weakens mildly today but stays in range of 1.0619/0828. Intraday bias remains neutral first. As noted before, choppy rise from 1.0339 is seen as a correction. Hence, in case of another rise, upside should be limited by 1.0872 resistance and bring fall resumption eventually. Break of 1.0619 will turn bias to the downside for retesting 1.0339 low.

In the bigger picture, whole down trend from 1.6039 (2008 high) is in progress. Such down trend is expected to extend to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. On the upside, break of 1.1298 resistance is needed to confirm medium term bottoming. Otherwise, outlook will stay bearish in case of rebound.

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Daily Pivots: (S1) 112.09; (P) 112.77; (R1) 113.22; More...

Breach of 112.04 suggests that fall from 118.65 is resuming. Nonetheless, there is no change in the view that this choppy decline is a correction. Hence, we'd expect strong support from 38.2% retracement of 98.97 to 118.65 at 111.13 to contain downside and bring rebound. Above 113.44 minor resistance will turn bias neutral first. Break of 115.36 resistance will argue that such correction is finished and turn bias to the upside for 118.65 high

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 correction 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. Rejection from 125.85 and below will extend the consolidation with another falling leg before up trend resumption.

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Daily Pivots: (S1) 1.2445; (P) 1.2491; (R1) 1.2526; More...

GBP/USD continues to be bounded in range below 1.2705 and intraday bias remains neutral. As noted before, rise from 1.1986 is seen as the third leg of the consolidation pattern from 1.1946. Hence, in case of another rise, we'd expect upside to be limited by 1.2774 resistance and bring down trend resumption. On the downside, below 1.2411 minor support will argue that rise from 1.1986 is completed and turn bias to the downside for 1.1946 low.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There is no sign of medium term bottoming yet. Sustained trading below 61.8% projection of 2.1161 to 1.3503 from 1.7190 at 1.2457 will target 100% projection at 0.9532. Overall, break of 1.3444 resistance is needed to confirm medium term bottoming. Otherwise, outlook will remain bearish.

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Daily Pivots: (S1) 0.9889; (P) 0.9935; (R1) 0.9966; More.....

Intraday bias in USD/CHF will remain neutral for the moment as the consolidation pattern from 0.9860 extends. While further recovery cannot be ruled out, upside should be limited by 1.0043 resistance and bring another decline. Current fall from 1.0342 is seen as the third leg of the pattern from 1.0327. Below 0.9860 will target 61.8% retracement of 0.9443 to 1.0342 at 0.9786 and below. On the upside, break of 1.0043 will indicate short term bottoming and turn bias back to the upside.

In the bigger picture, rejection from 1.0327 resistance suggests that consolidation pattern from there is still in progress. Fall from 1.0342 is seen as the third leg and retest of 0.9443/9548 support zone could be seen. But we'd expect strong support from there to contain downside. At this point, we're still expecting the larger rally to resume later to 38.2% retracement of 1.8305 to 0.7065 at 1.1359, after the consolidation completes.

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Monday February 6: Five things the markets are talking about

Last weeks market data capped a week that saw monetary policy makers in Japan, the U.K. and the U.S stand pat, at least until they can truly assess the impact of Trumponomics on global growth.

The odds for a Fed March rate hike have dropped after Friday's U.S jobs report showed weak wage growth even as hiring picked up – investors continue to expect a "gradual" approach to tightening.

For this week, on the economic data front, pales in comparison to last week. In Australasia, there are three central bank announcements – Reserve Bank of Australia (RBA) this evening (10:30 EST), Reserve Bank of New Zealand (RBNZ) and Reserve Bank of India (RBI). In Europe, there is merchandise trade and industrial production.

Stateside, Tuesday's JOLTS openings and U.S trade report take center stage, while Friday's consumer sentiment is expected to remain steady at post-election highs.

Note: A number of Fed speakers are expected to offer commentary on last weeks FOMC meeting.

North of the border, Canada will post its own merchandise trade balance, housing starts and its all-important jobs report on Friday (08:30 EST).

1. Global equities rally on Trump deregulation orders

Japan's Nikkei rallied overnight as financial stocks climbed following measures ordered by President Trump to reduce regulation in the financial sector, although a slightly stronger yen kept gains limited. The Nikkei rose +0.3%.

Even Hong Kong stocks happened to snap their four-day losing streak on mainland demand. The benchmark Hang Seng index added +1.0%. Financial, telecommunication, and consumer goods sectors were among their best performers.

In China, equity gains have been hampered by last week's People's Bank of China (PBoC) tightening. The Shanghai Composite Index gained +0.5%.

In Europe, equity indices are trading mixed, but generally higher. Major banking stocks are trading mixed in the Eurostoxx, while commodity and mining stocks are leading the gains in the FTSE 100.

U.S equities are set to open in the 'black' (+0.1%).

Indices: Stoxx50 flat at 3,278, FTSE +0.2% at 7,205, DAX flat at 11,656, CAC-40 +0.3% at 4,838, IBEX-35 +0.1% at 9,470, FTSE MIB -0.3% at 19,053, SMI +0.2% at 8,370, S&P 500 Futures +0.1%

2. Oil finds firmer footing from dollar exploits

Oil prices are on the rise as investors shift money into crude futures as the dollar weakens, and over concerns that new U.S. sanctions against Iran could be extended to affect crude supplies.

However, intraday prices should be capped by growing U.S. production as well as worries that import demand in China could slow.

Brent crude futures are trading at +$56.96 per barrel, up +15c from their Friday's close, while U.S. West Texas Intermediate (WTI) futures are up +18c at +$54.01 a barrel.

Note: Data last week showed that investors have raised their net long U.S. crude futures and options positions in the week to Jan. 31 to a record +412,380 lots.

Ahead of the U.S open, gold has surpassed the strong resistance zone of $1,219-21. The metal on Friday erased losses as the "big" dollar came under pressure from a payrolls report that flagged up weak wage growth in January, weakening the case for near-term interest rate hikes.

3. Sovereign yields remain rangebound

Investors are still nervous about the BoJ's policy stance to keep a lid on the recent rise in domestic yields. Trading yen recently has been relatively volatile due to some of the wild yield moves on 10-year JGB's. However, since the BoJ's signal last week that it plans to buy more than +$6B worth of Japanese debt product with 5- to 10-year maturities, the market's concerns have receded. But, another gain in benchmark yields is expected to rattle investors. Currently, 10-year yield is trading flat overnight at +0.095%.

Note: Trump and Japanese PM Abe are to meet later this week (February 10). The U.S. president has accused Japan's carmakers of engaging in "unfair trade" practices and suggested he favours a weaker dollar.

Elsewhere, The yield on the benchmark 10-year U.S. Treasury note is trading atop of +2.44%. The yield on the 10-year U.K. gilt has dropped to +1.374% from +1.460% before the BoE decision last week, while the yield on the 10-year German bund has declined to +0.420%.

4. "Big" dollar is confined to tight ranges

The USD remains range bound outright against the majors as the market continues to digest Friday's U.S jobs report. The non-farm payroll (NFP) headline figure showed a greater-than-expected rise in job growth (+227k. However, the unemployment rate edged up (+4.8%), while the m/m wage growth (+0.12%) was disappointing.

In Japan, Abenomics received another boost to its credibility after Japan's overall 2016 real average monthly wages rose by +0.7% for its first rise in five- years and biggest increase since 2010. Currently, ¥112 remains key support for the USD/JPY pair (¥112.61).

The EUR/USD continues to hover around the mid-€1.07 area as the market awaits ECB's Draghi's testimony at the European Parliament for clues on the outlook for the central bank's stimulus program.

Nevertheless, the 'single' unit remains vulnerable to selling due to eurozone's political concerns – dwindling support for the French candidate Fillon in polls could weigh on EUR.

Elsewhere, INR has strengthened to a three-month high outright (INR67.19) as investors are again willing to take risks in EM.

Note: Foreign investors have invested about +$347m in India's debt market so far this month, almost already erasing January's -$512m net outflow.

5. Germany's order data improves, Aussie retail disappoints

Euro data this morning shows that Germany's December manufacturing orders posted their strongest monthly gain in over two-years (+5.2% vs. +0.8% e), led by big-ticket orders for capital goods.

Against the background of Brexit and Trump, the data suggests that the German industry could shift into a higher gear for H1 2017.

The increase was led by domestic demand and a sharp increase in orders from the rest of the eurozone.

Down under and ahead of this evening's RBA decision, where expectations are largely for a rate hold, Aussie retail sales was disappointing, registering the first decline in over a year (-0.1% – first m/m decline since Aug 2015 vs. +0.3% e).

USD/JPY is showing little movement at the start of the week. Currently, the pair is trading at 112.50. On the release front, Japanese Average Cash Earnings edged lower to 0.1%, shy of the forecast of 0.4%. In the US, there are no major events on the calendar. On Tuesday, the US releases JOLTS Job Openings, with the indicator expected to rise to 5.56 million.

On Friday, US job numbers were mixed. Nonfarm payrolls jumped to 227 thousand, well above the estimate of 170 thousand. However, wage growth disappointed, as Average Hourly Earnings slipped to 0.1%, short of the forecast of 0.3%. There's no arguing that the US economy is performing well, but there is a sense of uneasiness in the markets as Donald Trump continues to create controversy and dissent both at home and abroad. Trump has picked a fight with Mexico and his travel ban on Moslems from seven countries has created a strong backlash. Moreover, the lack of an economic policy is a major source of concern and the the post-election euphoria which sent the markets higher appears to have dissipated. The Federal Reserve is no less in the dark than the rest of us, and is expected to adopt a wait-and-see attitude in the coming months. If the economy continues to grow, there is a strong likelihood of another rate hike in the first half of 2017, which is bullish for the dollar.

Just a couple of weeks into his presidency, President Donald Trump has not hesitated to spat with US trading partners. Last 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.

EUR/USD has edged lower in the Monday session, as the pair trades at 1.0740. On the release front, it's a quiet start to the week, with no major events in the US or Europe. German Factory Orders sparkled in December, with a gain of 5.2%, compared to the forecast of 0.6%. Eurozone Retail PMI dipped to 50.1 points, while Sentix Investor Confidence dropped to 17.4 points, above the estimate of 16.7 points. In the US, there are two minor events on the schedule. On Tuesday, the US releases JOLTS Job Openings, with the indicator expected to rise to 5.56 million.

German numbers were a mixed bag last week, but manufacturing numbers remain strong. On Monday, Factory Orders sparkled with a gain of 5.2%. This follows German Manufacturing PMI, which improved to 56.4, its strongest reading in three years. We'll get a look at Industrial Production on Tuesday. Meanwhile, inflation has headed higher in the Eurozone, buoyed by stronger economic growth and higher oil prices. This is positive news for the ECB, which has long tried to raise inflation with an ultra-loose monetary policy. Still, inflation levels remain well below the ECB's target of 2 percent, and analysts are not expecting any drastic changes in monetary policy in 2o17.

On Friday, US job numbers were mixed. Nonfarm payrolls jumped to 227 thousand, well above the estimate of 170 thousand. However, wage growth disappointed, as Average Hourly Earnings slipped to 0.1%, short of the forecast of 0.3%. There's no arguing that the US economy is performing well, but there is a sense of uneasiness in the markets as Donald Trump continues to create controversy and dissent both at home and abroad. Trump has picked a fight with Mexico and his travel ban on Moslems from seven countries has created a strong backlash. Moreover, the lack of an economic policy is a major source of concern and the the post-election euphoria which sent the markets higher appears to have dissipated. The Federal Reserve is no less in the dark than the rest of us, and is expected to adopt a wait-and-see attitude in the coming months. If the economy continues to grow, there is a strong likelihood of another rate hike in the first half of 2017, which is bullish for the dollar. On the other hand, if Trump makes good on his promises to “make America first” and implement protectionist policies, the greenback could lose ground against major currencies such as the euro.

EUR/USD

Current level - 10750

The intraday outlook is bearish below 1.0800 minor resistance, for another dip to 1.0690 before bouncing higher towards 1.0870 hurdle.

Profit-taking affects gold curbing silver and platinum

USD/JPY

Current level - 112.68

My outlook here is negative, for a break through 112.00 area, towards 111.40, en route to 109.80 zone. Key resistance lies at 113.50.

GBP/USD

Current level - 1.2478

The downtrend is intact, for a tight test of 1.2415 support area, before reversal and rise towards 1.2610 zone. Crucial intraday resistance lies at 1.2535.