Last Friday’s non-farm payroll number disappointed the market by showing only 148k new jobs added, versus market expectation of 190k.

An unexpected loss of 20k retail positions during the holiday season came to be a big surprise, which again shows the struggle of traditional ‘brick and mortar retail’ business against the backdrop of shriving e-commerce.

Despite lower-than-expected headline numbers, one-time miss does not change the big picture of robust job market condition with a string of upbeat data over the past 24 months. December average hourly earnings rose modestly and unemployment rate held at 4.1%. The US dollar experienced ‘knee-jerk’ selloff when the date came out, but subsequently recovered the losses in the later trading session. The likelihood of March rate hike rose to 68.1% from 51.7% a week ago, according to CME’s FedWatch tool.

The US dollar index has found some support at around 91.6 area after three-week decline. EUR/USD is consolidating within a narrow zone between the 1.201 to 1.207 area. USD/JPY rallied for a fourth day to 113.1 area, with its immediate support and resistance level at 111.4 and 114.2 respectively.

US equity indices rallied on Friday, refreshing record highs despite soft non-farm payrolls. The major equity indices – Dow, S&P, NASDAQ, Nikkei and Hang Seng are riding strong upward momentum, which is likely to spread over to other regional markets. Soft dollar sent oil and metal prices higher, leading to higher energy and factory inputs, which will boost inflations in the long run. 

Crude oil price stayed at elevated levels as last Friday’s US DoE commercial crude oil report showed some 7.41 million barrels drop in stockpile over the last week. This smashed market consensus of 5.43 million drop and marked an eight-consecutive week’s slump in inventory as demands are picking up. Technically, however, Brent crude oil price is facing some resistance at a key 200% Fibonacci Extension level of US$68.0 area.

Market Calendar – Non-Farm Payrolls

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Crude Oil Brent –Cash