The ole 1-2 has hit the markets today with the ADP coming in stronger than expectations and 15 minutes later, the initial jobless claims also came in stronger than expectations. Continuing claims also declined and therefore were stronger than expectations. Stronger jobs keeps the fear of wage inflation and one of the key risks for 2023. The Fed in their central tendencies implied they would like to see the unemployment remove up to 4.6% from 3.7% currently.
The job market is a fickle thing currently as there are plenty of job cut announcements especially in the tech sector and big Sector. However the supply workers remains a problem as baby boomers exit the workforce at a faster pace.
Fed's George just weighed in with her views on the economy saying she does not see rates coming down until "well into 2024".
Stocks have moved lower as a result. The futures are now implying:
- Dow Industrial Average -193 points
- NASDAQ index -70 points
- S&P index -23 points
Those indices were higher in premarket trading.
US yields have moved higher with the two year now up 8.9 basis points at 4.476%. The 10 year yield is up 6.4 basis points at 3.769%. The Fed is currently targeting a high yield of 4.5%. The central tendencies released in December see a terminal rate of 5.1%. Fed's Kashkari sees a terminal rate of 5.4% (from an interview yesterday).
Looking at the forex:
EURUSD:The EURUSD has moved below the "value area" where most of the price action has taken place over the last three or so trading weeks. The low of them value area comes at 1.05843 (up to 1.0594). Stay below that area will now keep the sellers more control (risk for sellers). On the downside the 61.8% retracement and the low price from Tuesday at 1.0518, the next major targets. Keep in mind that the 50% midpoint of the 2022 training range is at 1.05155. That is a key level that help support on Tuesday. A move below would increase the bearish bias
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USDJPY: The USDJPY has broken higher by the higher rates, and in the process has moved away from it 200 hour moving average at 132.238. The 50% midpoint of the move down from the December 15 high comes in at 133.832 and represents the next upside target off the hourly chart above. Above that level and traders would look toward the swing area between 134.49 and 134.650 (see red numbered circles and yellow shaded area on the chart above).
The buyers are making a play on the brakes above the 100 and 200 hour moving averages with an upside path defined.
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GBPUSD: The GBPUSD has moved sharply lower and in the process has now moved below the 38.2% of the move up from the November for the low at 1.19479 (see four hour chart above). That level is between a swing area defined by 1.1939 and 1.19543 (see red numbered circles on the chart above). That area is now risk. Stay below is more bearish going forward.
The low price from earlier this week at 1.18989 is the next downside target. The low price just reached 1.19109.