Dollar strengthens in early US session after markets showed little reactions to data that showed another month of deep contraction in the US job markets. Non-farm payroll dropped -524k in Dec, just slightly better than expectation of -550k. Nov's figures was revised down from -533k to -584k. Combined jobless in the past two months still exceed -1m. Unemployment rate surged sharply from revised 6.8% to 7.2%, hitting a five year high. Nevertheless, there is no selling of dollar seen after the release and indeed, the greenback rises against the Euro as dusts settle.
Data released from Canada saw job markets contracted -34.4k in Dec, worse than expected -22k. Unemployment rate also rose to 6.6%, above consensus of 6.5%, hitting a three year high. Though, housing starts came in at 177.3k in Dec, above expectation of 170k. Building permits dropped -11.8% in Nov.
Released earlier, Germany's retail sales surprising rose 0.7% mom in November, higher than market expectation of 0.4% and -2.2% in the previous month. The improvement was brought by huge decline in oil price which boost sentiment. At the same time, Eurozone's retail sales also climbed 0.6% mom while analysts anticipated a flat reading and October's revised figure was -1%. Germany's industrial production contracted 3.1% in November, compared with consensus of -2% and -1.8% (revised) in October.
In the UK, industrial production plunged -2.3% mom in November, lower than market expectation of -0.6% and -1.7% a month ago. The manufacturing component recorded significant drop of -2.9% mom. On yearly basis, manufacturing production was down -7.4%, compared with a revised -5% in October. On the other hand, core PPI rose unexpectedly to 5% yoy in December (consensus: +4.6%, November: +5%). Overall output price index rose 4.7% yoy. Although higher than consensus, it's the lowest annual growth since Dec 2007. Input price index rose 4.3%, also better than analysts' anticipation of 2.8% and November's 8.6% as revised.
EUR/USD Mid-Day Outlook
Daily Pivots: (S1) 1.3558; (P) 1.3678; (R1) 1.3823; More
EUR/USD's break of 1.3528 minor support indicates that recovery from 1.3313 should have completed at 1.3796 after failing to take out 4 hours 55 EMA. As discussed before, with EUR/USD still staying well within the inner falling channel, fall from 1.4719 should still be in progress. Intraday bias is flipped back to the downside for 1.3313 first. Break will confirm this case and bring deeper fall towards 1.2329 low.
On the upside, focus remains on the mentioned trend line resistance (now at 1.3830). break of the channel resistance will suggest that fall from 1.4719 has completed at 1.3313 already. More importantly, this will leave such fall in three wave corrective manner and indicate that a break above 1.4719 should at least be seen before topping. Break of 1.4360 resistance will confirm the short term bullish case.
In the bigger picture, a medium term bottom no doubt in place at 1.2329 and fall from 1.6038 should have completed. Whether such fall is impulsive or corrective in nature is debatable. But after all, in either case, as long as 1.4867 resistance holds, such decline is still in favor to resume. Though, some larger scale consolidation could be seen first. However, above 1.4867 will dampen the bearish view and argue that stronger rally would be seen to retest 1.6038 record high.