US non-farm payroll report is a major focus today. Markets are expecting 150k job growth in January. Unemployment rate is expected to stay unchanged at 3.90%. Average hourly earnings are expected to grow 0.50% mom.
Looking at related economic data, ADP private job was a big disappointment with -301k losses. ISM manufacturing employment ticked up from 53.9 to 54.5. ISM services employment dropped from 54.9 to 52.3. Four-week moving average of initial jobless claims rose from 205k to 255k. All in all, there are prospects of downside surprise in today’s NFP readings, except wages growth.
Dollar index had a steep decline this week, thanks to the strong rebound in EUR/USD. The question now is on whether long term fibonacci level of 61.8% retracement of 102.99 to 89.20 at 97.72 is too much for DXY to overcome.
Sustained break of trend line support at around 95.00 will argue that a medium term top was formed at 97.44, on bearish divergence condition in daily MACD. In this case, DXY would likely drop through 94.62 towards 93.43 resistance turned support before finding a bottom. Reactions to today’s NFP could guidance the direction for the rest of the quarter.
