The euro and the pound continued their positive streak from the previous trading session while the Greenback barely gained support from upbeat jobs data.
Meanwhile, the Loonie resumed its rally thanks to more crude oil gains and a couple of strong medium-tier reports from Canada.
- U.S. Challenger job cuts down 3.6% y/y in Dec
- U.S. ADP non-farm employment up by 250K vs. 191K forecast
- U.S. Markit final services PMI upgraded from 52.4 to 53.7
- Canadian raw material prices up 5.5% vs. 4.0% consensus
- Canadian industrial product prices up 1.4% vs. 0.8% forecast
- U.S. initial jobless claims at 250K vs. 241K estimate
- U.S. EIA crude oil inventories down by 7.4M barrels vs. 5.2M forecast
- Fed official Bullard: Link between jobs and inflation may have disappeared
Mostly upbeat U.S. data
Uncle Sam’s reports were mostly in the green, keeping dollar traders hopeful for an upbeat NFP release on Friday.
The December ADP non-farm employment change report showed a 250K gain in private payrolls, much higher than the projected 191K figure and the earlier 185K increase.
Components of the report indicated that goods-producing jobs were up 28K for the month while service sector jobs increased 222K versus the earlier 155K gain. These were enough to bring the December reading to its best level since March 2017.
Challenger, Gray & Christmas also released an upbeat jobs report which showed a 3.6% year-on-year drop in layoffs for December. This amounted to a total of 418,770 in job cuts for the year, its lowest annual total since 1990. The company noted:
“The tight labor market, coupled with uncertainty surrounding health care and tax legislation, possibly kept employers from making any long-term staffing decisions this year. However, 2018 may see an increase in job cut announcements, as companies realign with consumer demand.”
Initial jobless claims, however, came in at 250K versus the 241K consensus and the previous week’s 247K figure.
Canada’s leading inflation indicators
Apart from getting a boost from another positive day for crude oil, the Loonie also drew some support from Canada’s leading indicators for inflation.
The raw materials price index (RMPI) printed a solid 5.5% gain versus the estimated 4.0% increase and the earlier 3.8% gain. This means that these higher costs incurred by manufacturers would likely be passed on to consumers, thereby boosting overall price levels down the line.
The industrial product price index (IPPI) also posted an impressive 1.4% gain versus the estimated 0.8% uptick for November. To top it off, the October reading was upgraded from 1.0% to 1.1%. Underlying data revealed that the pickup was mostly spurred by higher prices for energy and petroleum products.
Another positive day for risk
U.S. equities chalked up yet another solid finish, with all three indices posting remarkable gains.
- Dow 30 index is up 152.45 points to 25,073.13 (+0.61%)
- S&P 500 index is up 10.93 points to 2,723.99 (+0.40%)
- Nasdaq is up 12.38 points to 7,077.91 (+0.18%)
Commodities are also in the green, with crude oil leading the pack on larger than expected draws reported by the API and EIA earlier in the day.
- WTI crude oil is up to $62.02 per barrel
- Brent crude oil is up to $68.08 per barrel
- Gold is up to $1,324.10 per troy ounce
Major Market Mover(s):
EUR & GBP
These European currencies were already having a blast in the previous trading session and carried on with their after-party during U.S. market hours.
EUR/USD kept climbing from the 1.2050 area to a high of 1.2089, EUR/JPY is up to a high of 136.37, EUR/AUD advanced from 1.5351 to 1.5416, and EUR/CHF bounced to 1.1770.
GBP/USD held on to the 1.3550 minor psychological level for a while then ticked up to 1.3569, GBP/JPY is up to the 153.00 handle, and EUR/GBP retreated to the .8900 mark.
The Loonie was another big winner for the session as it was buoyed by rising crude oil prices and upbeat data.
USD/CAD edged down from 1.2525 to a low of 1.2489, CAD/JPY is up to the 90.30 area, EUR/CAD slipped from a high of 1.5140 to 1.5080, and NZD/CAD is down to a low of .8932.
Watch Out For:
- 12:30 am GMT: Australia’s trade balance (0.55B AUD expected, -0.33B AUD previous)