Market news

Week 1 data: focus on the NFP

By Michael Stark

02 January 2024

3036 Fed

The new year started with a bang in crypto markets as bitcoin reached a new 20-month high above $45,000, as traders’ focus remains on applications for ETFs. Other major CFD markets have been quieter so far in 2024 as participants await important news from the USA in the next few days. 

The end of 2023 was notable for monetary policy because the majority of expectations began to shift towards cuts by major central banks this year. While the Bank of England’s Monetary Policy Committee has generally remained firm on no cuts for the foreseeable future, the European Central Bank (ECB) might cut around the end of the year and most participants expect the Fed to call for a single cut in March. The Fed’s minutes on Wednesday night GMT might give traders more clues on how rates could move at the end of the quarter.

Overall, it seems that a severe recession is now much less likely in the near future in most major countries compared to this time last year. No major economy is currently in recession based on GDP data. The countries with the largest GDPs in recession now are Saudi Arabia and the Netherlands.

This week’s most important regular release is the American job report including non-farm payrolls (‘the NFP’) on Friday afternoon GMT. The Canadian job report is at the same time while Germany’s job report for December is due on Wednesday morning. Traders are also looking ahead to preliminary/flash inflation from the eurozone and various constituent countries on Thursday and Friday.

Gold-dollar, daily

Gold’s uptrend still seems to be active in the first days of trading in 2024. The overall fundamental situation seems to be fairly positive, seemingly likely that the Fed will start a cycle of easing policy this quarter and some recent support from tension in the Red Sea. The Fed’s minutes and Friday’s job report are likely to drive higher volatility but probably not a shift in the trend unless either or both are notably surprising.

On the chart, $2,100 is an obvious short- to medium-term resistance that might resist testing. The 20-day SMA around $2,035 might be a support in the next few days. An immediate move up doesn’t seem very favorable because of buying saturation based on the slow stochastic. The uptrend also seems to be mature. To capture a possible intraday move up, traders would probably look for a weaker-than-expected NFP or, less likely, confirmation from the Fed’s minutes that a sequence of cuts is coming this year.

Key data this week

Bold indicates the most important releases for this symbol.

Wednesday 3 January

  • 15.00 GMT: ISM manufacturing PMI (December) – consensus 47.1, previous 46.7

  • 15.00 GMT: JOLTs job openings (November) – consensus 8.85 million, previous 8.73 million

  • 19.00 GMT: minutes from the Federal Open Market Committee

Thursday 4 January

  • 13.15 GMT: ADP employment change (December) – consensus 113,000, previous 103,000

  • 13.30 GMT: initial jobless claims (30 December) – consensus 215,000, previous 218,000

Friday 5 January

  • 13.30 GMT: non-farm payrolls (December) – consensus 163,000, previous 199,000

  • 13.30 GMT: American unemployment (December) – consensus 3.8%, previous 3.7%

  • 13.30 GMT: American annual average hourly earnings – consensus 3.9%, previous 4%

  • 13.30 GMT: American monthly average hourly earnings (December) – consensus 0.3%, previous 0.4%

  • 15.00 GMT: ISM service PMI (December) – consensus 52.6, previous 52.7

Euro-dollar, daily

The euro’s uptrend against the US dollar also still seems to be active as participants expect the difference in rates between the Fed and the ECB to decrease and possibly even reverse briefly this year. At the time of writing, the Fed is expected to cut its funds rate by a total of around 1.5% in 2024, while there still isn’t a majority expecting any cut by the ECB until next year. If accurate, that would mean the range of the funds rate being lower than the ECB’s main refinancing rate around the end of the third quarter.

However, the ECB certainly seems to be doing better on inflation than the Fed, with the eurozone’s rate for November reaching 2.4%, not much above target. Friday’s flash inflation for December from the eurozone is particularly important because it’s expected to increase to around 3%. If accurate, that might indeed suggest an extended hold by the ECB. Individual major countries’ releases, particularly Germany and France, might also be important since these are likely to diverge from each other. Germany’s job report is expected to show slightly better figures in December, with unemployment rising by 2,000 less than in November.

The technical situation for EURUSD is generally quite similar to gold above but the uptrend seems to be a bit healthier. After a new intraday high was reached on Thursday 28 December, there has been a retracement and the slow stochastic no longer gives an overbought signal. The 50 SMA completed golden crosses above the 100 and 200 in early and late December respectively. As for gold, though, most large traders will probably wait for the Fed’s minutes and the NFP before entering significant positions, so speculative short-term opportunities might come from data on Friday.

Key data this week

Bold indicates the most important releases for this symbol.

Wednesday 3 January

  • 8.55 GMT: German unemployment change (December) – consensus 20,000, previous 22,000

  • 8.55 GMT: German unemployment rate (December) – consensus 5.9%, previous 5.9%

  • 15.00 GMT: ISM manufacturing PMI (December) – consensus 47.1, previous 46.7

  • 15.00 GMT: JOLTs job openings (November) – consensus 8.85 million, previous 8.73 million

  • 19.00 GMT: minutes from the Federal Open Market Committee

Thursday 4 January

  • 7.45 GMT: French annual inflation (preliminary, December) – consensus 3.8%, previous 3.5%

  • 7.45 GMT: French monthly inflation (preliminary, December) – consensus 0.2%, previous negative 0.2%

  • 13.00 GMT: German annual inflation (preliminary, December) – consensus 3.8%, previous 3.2%

  • 13.00 GMT: German monthly inflation (preliminary, December) – consensus 0.2%, previous negative 0.4%

  • 13.15 GMT: ADP employment change (December) – consensus 113,000, previous 103,000

  • 13.30 GMT: initial jobless claims (30 December) – consensus 215,000, previous 218,000

Friday 5 January

  • 7.00 GMT: German annual retail sales (November) – consensus negative 0.5%, previous 0.1%

  • 7.00 GMT: German monthly retail sales (November) – consensus negative 0.5%, previous 1.1%

  • 10.00 GMT: eurozone-wide annual non-core inflation (flash, December) – consensus 3%, previous 2.4%

  • 10.00 GMT: eurozone-wide annual core inflation (flash, December) – consensus 3.5%, previous 3.6%

  • 10.00 GMT: eurozone-wide monthly core inflation (flash, December) – consensus 0.1%, previous negative 0.6%

  • 13.30 GMT: non-farm payrolls (December) – consensus 163,000, previous 199,000

  • 13.30 GMT: American unemployment (December) – consensus 3.8%, previous 3.7%

  • 13.30 GMT: American annual average hourly earnings – consensus 3.9%, previous 4%

  • 13.30 GMT: American monthly average hourly earnings (December) – consensus 0.3%, previous 0.4%

  • 15.00 GMT: ISM service PMI (December) – consensus 52.6, previous 52.7


This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.


Author:

Michael Stark
Michael Stark

Michael has been investing in shares and currencies for 12 years, with a focus in the past seven specifically on CFDs. As an associate of the Society of Technical Analysts, Michael's primary concentration is on charts and indicators. His goal in educating traders is to simplify matters wherever possible and help them find their 'aha!' moment when they achieve what they're looking for from speculation with CFDs.