Daily FX Trading Update: Underlying Weaknesses in US NFP Report – Jan 12, 2015

Daily FX Trading Update: Underlying Weaknesses in US NFP Report - Jan 12, 2015

The US dollar experienced FX trading weakeness event as the US reported a strong NFP reading for December and 252K jobs versus the estimated 241K gain. Apart from that, the November reading was upgraded from an initially reported 321K increase to 353K, bringing the jobless rate down from 5.8% to 5.6% at the end of 2014. However, the participation rate once again marked a decline and reflected weaker confidence in the jobs market. Average hourly earnings was also weak as it indicated a 0.2% drop in wages for December and a downgrade from 0.4% to 0.2% in November. There are no major reports lined up from the US economy today, as traders could weigh in on the implications of the latest jobs release.

The euro managed to recover some of its FX trading losses to the dollar at the end of the week, as the US jobs release showed some weak points. Data from the euro zone was mostly weaker than expected though, with the German industrial production report marking a 0.1% decline and their trade surplus falling short of expectations. There are no major reports lined up from the euro zone today, leaving market sentiment as the main driver of forex price action.

FX Trading News

The pound got back on its feet to the dollar on Friday, as data from the UK economy came in stronger than expected. Manufacturing production picked up by 0.7% versus the projected 0.4% rise while the trade balance showed a 8.8 billion GBP deficit instead of the estimated 9.5 billion GBP shortfall. There are no major reports due from the UK today, suggesting either consolidation or continuation of the current FX trading trends.

The franc strengthened slightly on Friday even as Switzerland showed a weaker than expected unemployment rate. The figure held steady at 3.2% instead of improving to the estimated 3.1% reading, indicating the lack of improvement in the jobs sector. For today, there are no reports due from Switzerland as franc pairs could be in for a quiet FX trading day.

The yen advanced to the dollar and most of its other forex counterparts on Friday even though there were no reports released from Japan. There are no reports due from Japan today since banks are closed for the holiday, which could mean a quiet Asian FX trading session.

The comdolls advanced to the dollar on Friday, as weaknesses in the NFP report inspired a quick dollar FX trading selloff. In addition, the Chinese CPI came in as expected at 1.5% although the PPI marked a sharper than expected decline. In Australia, retail sales was weaker than expected at a mere 0.1% uptick versus the projected 0.3% increase. Data from Canada was also weak, as the economy subtracted 4.3K jobs in December and saw a 13.8 decline in building permits. There are no major reports due from these economies today.

To contact the reporter of the story: James Brennan at james@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.