Daily Market Update

Wages and Manufacturing fail to grow

January 10, 2020

The U.S. Dollar was mostly calm overnight, but it is now weakening based on the underwhelming figures in the Employment Situation released earlier.

Overview

Non-Farm Payrolls increased by 145K instead of 160K expected and its prior reading was downgraded slightly. Notably, Manufacturing Jobs contracted by (-12K) when at least 5K were forecast. More concerning is the fact that Average Hourly Earnings barely grew by 0.1% last month, which dropped the annual average from 3.1% to 2.9% even after some states have made headway in boosting minimum wage requirements.

Naturally, a slower economy in the U.S. could signify further help from the Federal Reserve later on via interest rate cuts. We shall see if the damage to the buck amplifies. It is possible that the signing of a trade deal next week between China and the U.S. could cause a market rally that could give rise to the greenback’s rivals. Vice Premier Liu He and a Chinese delegation are expected to be in Washington Monday through Wednesday.

 

What to Watch Today…

  • No major events scheduled for today.

Complete Economic Calendar can be found here.

 

EUR

The Euro cannot seem to sustain any momentum as it has laid mostly flat to poor economic data in the U.S. Thus far this year, the shared currency is down by over 1.0% although certain items going in its favor should advance it. Some traders credit the Euro’s carry-trade value, its use in the exchange of many assets contracts because of low-interest rates, as contributors to the currency hitting the brakes.

Nevertheless, we are on the camp of seeing a fundamental change of economic recovery as even Germany provided good news in the form of expansion in its Industrial Production. Expect better data to improve the prospects for Euro appreciation.

CAD

The Canadian Dollar is attempting to mount a bit of a comeback after stellar job figures came across the wire. An estimate of 25K jobs for December was beat coming in at 35.2K, bringing down along the Unemployment Rate to 5.6% from 5.8%. We are also monitoring if the currency will be affected by the prospect of escalation with Iran as an investigation by Canadian authorities seems to show that the plane crash days ago may have been shot down militarily in a mistake.

A spike in oil prices emerging from the higher chance of sanctions, and possible conflict, could return the “Loonie” to strength. It has lost about half a percent of value since the start of the young year.

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