What technical levels are in play through the US and Canada jobs reports. Be aware.

It is unemployment day with both the US and Canada jobs reports being released.

• Economists forecast a rise of 160,000 payroll jobs in December, with the unemployment rate expected to remain at 4.2%.
• Average hourly earnings growth is projected to cool to 0.3% from the previous 0.4%.
• The ADP came in at 122K which was weaker than expected but the JOLTs job openings rose to 8.077M vs 7.773M estimate (stronger). The initial jobless claims have been trending lower (stronger). So there are some mixed signals.

In Canada:

• Unemployment rate is expected at 6.9% vs 6.8% last month
• Employment change is expected at 25.0K vs 50.5 K last month
• Last month full time rose by 54.2K. Part Time fell -3.6K

Fed funds futures are ruling out a 25 bps rate cut for later this month with ~93% odds priced in that the Fed will keep rates unchanged. The first full rate cut is only priced in for June with ~42 bps in total priced for this year (the Fed saw 2 cuts in their dot plot in December). The swings, if any, in pricing here will be what dictates broader market sentiment before we get to the weekend.

Ahead of the release, the USD is up-down with a modest tip to the topside. The kickstart video below outlines the key levels in play during the report. Be aware. Be prepared.

Central bank speak today:

St. Louis Federal Reserve President Alberto Musalem urged caution regarding further interest rate reductions, highlighting the challenges posed by the evolving economic outlook. In an interview with The Wall Street Journal, Musalem noted that last month’s decision to cut rates was a “close call” and emphasized that the current economic landscape differs significantly from when the Fed began rate cuts last year. He also raised concerns about the growing risk of inflation becoming entrenched between 2.5% and 3%, complicating efforts to meet the Fed’s long-term targets.

The Bank of Japan (BoJ) is reportedly considering its rate decision for January, according to Bloomberg sources. The central bank is said to be contemplating raising core-core inflation forecasts for fiscal years 2024 and 2025 and potentially adjusting inflation expectations amidst yen fluctuations. However, no decision has been made on increasing rates. The BoJ intends to wait until the last possible moment before finalizing any decisions regarding rate hikes.

The stock futures in the US are implying lower levels ahead of the data:

• Dow -42 points
• S&P -10.5 points
• Nasdaq -39.22 points

IN the US debt market, the snapshot shows:

• 2-year 4.289%, +2.7 basis points.
• 5-year 4.472%, +2.3 basis points.
• 10 year 4.695%, +1.5 basis points
• 30 year 4.928%, +0.9 basis points

in other markets:

• crude oil is trading sharply higher by $2.46 and $76.40
• gold is trading up six dollars or 0.25% at $2675
• Bitcoin is rebounding by $2400-$94,945

This article was written by Greg Michalowski at www.forexlive.com.