What Happened Yesterday

The Canadian dollar strengthened to a three-month high against the USD on Friday after stronger-than-expected domestic jobs data boosted expectations for a Bank of Canada interest rate hike this month.

The Canadian economy added almost 80,000 jobs for the second month in a row in December and the jobless rate dipped to a 41-year low of 5.7%, Statistics Canada said. Analysts had expected a modest gain of 1,000 jobs.

Chances of a hike at the next rate decision on Jan. 17 nearly doubled after the jobs report to 68%, the overnight index swaps market indicated.

The currency touched its strongest since Sept. 27 at 1.2355.

Another major boost for the CAD has been the Oil rally. On Thursday, the price of oil, reached its highest since May 2015 at $62.21.

Focus now turns to next weeks Bank Of Canada rate decision but I am expecting sellers on rallies from here.

The USD Index pared gains on Friday after data showed the U.S. economy created fewer jobs than expected in December.

U.S. nonfarm payrolls increased by 148,000 jobs last month. Economists were forecasting job gains of 190,000. Employment data for October and November data were revised to show 9,000 fewer jobs created than previously reported.

The USD briefly slipped after the softer-than-forecast number, but has since regained the lost ground.

Fed funds futures have priced in a more than 60% chance the U.S. central bank will hike interest rates in March, according to CME’s Fedwatch.

A bright spot in the U.S. December employment report was the rise in wage growth, analysts said.

Average hourly earnings rose 9 cents, or 0.3%, in December after gaining 0.1% in the prior month. That lifted the annual increase in wages to 2.5% from 2.4% in November.

In late trading, the USD gained 0.3% against the Yen to 113.14, while the Euro fell 0.2% to $1.2042.

Technical Set Up – What’s Happening with the Majors

Recent moves over the holiday break are holding and that has the USD on the back foot against all majors except for the Yen.

AUDUSD

Topside move still in play with support back at 0.7845.

Check our detailed AUDUSD Analysis

NZDUSD

Topside move still developing. Focus is on resistance at 0.7190.

Check our detailed NZDUSD Analysis

USDJPY

Topside move stalling towards resistance at 113.30. I’m expecting it to drift lower.

Check our detailed USDJPY Analysis

EURUSD

Recent upmove still looks good. Support at 1.1985 the key from here.

Check our detailed EURUSD Analysis

GBPUSD

Continues to rally as Brexit negotiations point towards a soft landing for the UK.

Check our detailed GBPUSD Analysis

USDCHF

Drifting lower with the overall USD move. Awaiting next batch of US data for next move.

Check our detailed USDCHF Analysis

USDCAD

Strong Employment data & rallying Oil points to a lower USDCAD.

Check our detailed USDCAD Analysis

What’s the Plan for Today?

The Asian session should be relatively quiet with the bulk of the Fundamentals today coming in the European session.

Most traders will be back at work today so we should see the currency markets back to full liquidity.

The EURUSD will be the major focus and there’s chance of a nice trade should the Eurozone data come in strong as it runs with the current upward bias.

Support is back at 1.1985 so if we do get crazy weak Euro data that’s the level to be selling through.

Overall take it easy and tune up your charts. There’s loads of action later in the week!

Today’s Fundamental Drivers

All the action is in the European trading session today!

Today’s Focus – Major Currencies in Play

You need to follow the economic data releases & best technical set ups to work out where the majority of action and interest will be.

EURUSD

Technical Set Up: Support @1.1985

Fundamental Driver: Eurozone data

Potential Strategy: Trade with the trend – I’ll be looking to buy on strong data.

Check our Next Best Trades list for full details.

Plan the Trade, Trade the Plan!

The idea of our “Market Insight” is to give you some guidance into your daily preparation.

Your Daily Analysis needs to become habitual – For full guidance on our daily routine click here.

Make sure you don’t waste unnecessary time in front of the screens.

Remember you need to be fresh, confident and ready to trade and by sitting aimlessly in front of your screens you will become stale and uncertain.

The key to your sucess: Isolate the opportunities that work for you and focus on them.

Don’t worry about things that you can’t make…..chasing them will only cause problems (tiredness & irrational behaviour will take over).

Tune up your charts & get ready to trade…..see you in the 247 Trade Zone!

Brad