Wednesday’s summary of the FOMC meeting worked out enthusiasm of investors around the world, but leaving behind a considerable disgust – therefore the focus shifts today to the American report from the labor market by the BLS, with which traders have high expectations hoping for ensuring quick profits – but also spectacular losses – volatility. In the shadows of waiting for the NFP and other employment rates will be announced the results of the January PMI service.
We met the minutes of the December meeting of the BoJ
Before we go to today’s events, let’s focus on publications of the Asian session. Just before 1:00 our time the Bank of Japan released minutes of the December Monetary policy meeting. The following major headings:
- Momentum that will reach 2 % inflation maintained
- The factors supporting the price increase becoming clearer
- The depreciation of the yen in recent times will increase the price in the short term, in the long may be insufficient to bolster inflation
- BoJ should continue easing monetary policy as long as the indicators show inflation of 2% or more
And how is the situation presented on chart? Quotations USD/JPY in December and January have encountered the ceiling in the vicinity of 118,620, which led to a downward correction which stopped at level of 112,570 and 38.2% Fibonacci retracement – already 7 candles in less than a month respects the mentioned zone and so is in Friday’s session. Thursday’s closing resembling pin bar can be an opportunity to open longs toward this year’s highs – it is worth to wait for it to develop after NFP and avoid unnecessary contact with excessive volatility.
Ready for the PMI festival ?
After a very good industrial PMI readings in Europe and the US, it’s time for the publication of results from the service sector. From early morning until 10:00 flowing will be readings from the Old Continent, summarized in one collective message for EZ. Then at 10:30 we will know the results of the PMI for services in the UK and in the afternoon (16:00) publication of ISM institute for the US economy.
If the markets do not highly over-estimate published at the beginning of the month the PMI industry – because it does not constitute a significant part of the GDP of developed economies, in the case of the services sector is completely different and publications of this type can cause additional volatility in the markets.
Will NFP follow the ADP and positively surprise ?
On Wednesday, at 14.15 we had the results of “small NFP” made by private institution ADP report about the US employment, which showed a jump in jobs for nearly 100,000 compared to forecasts. Markets expect that in January non-farm payrolls increased from 156,000 to 175,000 – but if NFP will follow the ADP and makes a positive surprise, we will see a strong reaction on the dollar.
It should be remembered that same NFP is not everything. Although markets follow primarily the indicator but publications on the unemployment rate, participation rates, or above all the changing dynamics of wages on a monthly and annual basis can greatly interfere with the final response on markets.
Forecasts of editorial team Comparic.pl coincide with the widely accepted consensus in terms of decline in the unemployment rate by one tenth to 4.6%, and the dynamics of hourly earnings at 0.3% mom and 2.8% yoy. Regarding results of NFP suggesting the results of the ADP report, we expect slightly higher reading than the consensus suggests, in the vicinity of 200,000.
