US non-farm payroll report is the major focus for today. Markets are expecting 400k job growth in December. Unemployment rate is expected to tick down from 4.2% to 4.1%. Wage growth is expected to continue to be strong, with average hourly earnings up 0.4% mom.
Looking at related data, ADP private employment grew strongly by 807k. ISM manufacturing component rose from 53.3 to 54.2. But ISM services employment dropped from 56.5 to 54.9. Four-week moving average of initial jobless claims dropped notably from 239k to 204.5. The NFP report is more likely a solid one than not.
Reactions from treasury yields to the data is worth a watch. 10-year yield is now close to 1.765 key near term resistance. A set of solid job data, in particular wage growth, could push TNX through this 1.765 resistance to resume larger up trend from 0.398. In this case, we could see TNX quickly accelerate through 2.0 handle to 61.8% retracement of 3.248 to 0.398 at 2.159 down the road, even within Q1. Such development would give USD/JPY and push upwards.
