Forex Signals Brief January 4: Two More Employment Reports from the US Today

Last year started with markets expecting the FED to stop raising rates and reverse policy, which kept the USD soft in Q1 and Q2, but the FED kept continued to keep the hawkisgh tone until recently, based on a strong labour market. However, they started giving dovish signals in Q4 and the USD turned bearish while risk assets turned bullish. So, that’s how 2024 ended, with the USD in retreat and stock markets at record highs.

Last week the volatility was low, being in the Christmass period, however there was enough price action, as traders made their last adjustmnets before the end of the year. Unemployment claims jumped to 218K from 206K previously, beating expectations of 211K while the Spanish CPI (consumer price index) inflation ticked lower to 3.1%, which showes that inflation continues to head toward 2% in the Eurozone. 

This means that the European Central Bank will accept the reality and announce the policy shift soon, as the FED did last month, starting to cut interest ratesas well. The Central Bank of Israel lower rates to 4.50% yesterday from 4.75% previously, opening the door for other central banks to start doing so.   

Today startyts with the Caixin Services PMI report from China, which is expected to show a tick higher to 61.6 points this month from 51.5 points previously. The CPI inflation from Germany and France is expected to turn positive in December after falling by 0.4% and 0.2% respectively in November and show a 0.2% increase. Final services are expected to remain unchanged both in the UK and the Eurozone.

we will have two more employment reports from the US, with the Uncemployment Claims being a more timely indicator of the status of the US labor market. Initial Claims remain at cycle lows, indicating that layoffs have not increased significantly, but Continuing Claims have been rapidly climbing, indicating that people are finding it more difficult to find another job after being laid off. Initial Claims are predicted to come 1K lower at 217K this week, up from 218K the previous week, while Continuing Claims are expected to be 1882K, up from 1875K the previous week.

The ADP employment firgures are expected to show 113K new jobs for December, up from 103K in November. The previous report fell short of expectations, but didn’t have much impact on the markets since the NFP report a couple of days later exceeded them all. Although this release is ineffective for forecasting the NFP number, it can be market-moving and provide wide insight into the US labor situation.

Cryptocurrencies suffered significant losses in 2022, with some losing up to 80% of their market capitalization, with Ethereum falling below $5,000. However, ETH/USD has reached new highs this year, proving that the trend has been bullish all year, with moving averages continuing to push the lows higher. This week buyers returned after a retreat lower, but they failed to take out last week’s high and reach $2,500 and yesterday we saw a dive to $2,127.

• ETH Buy Signal
• Entry Price: $1,947.38
• Stop Loss: $1,490
• Take Profit: $2,500