AUD/USD: 0.9000EUR/USD: 1.3670The dollar ended broadly weaker on Friday after the weather affected December NFP came in at just +74K, a long way below the anticipated +195k, and the smallest reading since January 2011. November’s data was revised up from 203k to 241k and the headline unemployment rate dropped to 6.7%. versus expectation of 7.0%, the lowest since October 2008, but was mainly due to more people leaving the labour force and the diminishing participation rate which fell to 62.8%, the lowest since 1978, so nothing to get too excited about.
The dollar did not like it as it raises the question of whether the Fed will continue tapering at the current rate, and fell across the board, although possibly not as much as might have been expected given the poor outcome, with the assumption being that this could have been a one off blip due to the weather, where hiring, particularly in the construction industry, was put on hold.
Technically the Euro looks to be on slightly firmer footing to start the week , with last week’s low at 1.3548 reasonably well protected for the time being. The 4 hour indicators are positive, and with the dailies having flattened out we could see a run up towards 1.3700 early in the week, although there is reputedly good selling interest up there.
If we do head above 1.3700, look for a run towards 1.3720 (50% pivot of 1.3892/1.3548) and possibly to 1.3760 (61.8%) and even towards 1.3810 (76.4%), although this looks ambitious.
A return to the downside would see minor support at the 200 HMA (1.3650), a break of which would head back towards 1.3600 (weekly Tenkan/pivot) and possibly to 1.3575 where the medium term rising trend support now lies. Below this would head back towards further decent support at 1.3560 (daily cloud), 1.3545/25 area (100 DMA, 61.8% of 1.3294/1.3892,) and then to 1.3500. Further out, 1.3455 (23.6% of 1.2042/1.3892 & 38.2% of 1.2755/1.3892) and 1.3435 (76.4% of 1.3294/1.3892) will attract.
There is a fair bit of secondary data to provide the interest this week, but with nothing due today and with the charts appearing to be rather inconclusive, I suspect that a session of 1.3630/1.3700 may cover it in the coming session. In the near term the Euro looks as though it might want to head a bit higher, but further out, I still prefer to look for levels to buy dollars for a deeper decline in the Euro. Tomorrow will rev it up somewhat, with the release of the December retail sales, the biggest month of the year, and will be a key focus of the week.
Economic data highlights will include:
M:
T: EU Industrial Production, US Retail Sales
W: EU Trade Balance, US Mortgage Applications, PPI, Beige Book
T: EU/German CPI, ECB Monthly Report, US CPI, Jobless Claims, Philly Fed Mfg Index
F: US Building Permits, Housing Starts, Industrial Production, Rts Michigan Consumer Sentiment Index
