US January Employment Report: Average
US non-farm payrolls increased in January by 157,000, versus the consensus expectation of 166,000. The US unemployment rate nudged up to 7.9 percent versus an expectation of 7.8 percent. The markets were apparently talking of a bigger number, and the last-minute expectations were probably around 185,000 with a 7.7 percent to 7.8 percent unemployment rate. However, the report was ‘saved’ by upward revisions – December's payroll count was changed from plus 155,000 to plus 196,000. Thus, today’s report contained no big surprises.
The uptick in the unemployment rate was the first since September, and as it is the Fed’s threshold variable for conducting monetary policy, the immediate reaction was that the end of quantitative easing is not in sight for now. It feels like people are thinking that perhaps these numbers will be revised later as well, and the payroll number is still in line with recent job growth.
All in all, this does not change US policy right now - and certainly not the Japanese or European policies. That leaves the drivers behind the EURUSD and USJPY bulls in place, and any setbacks should currently be seen as technical corrections. I stick with what I wrote earlier today that there is room for correction. Currently it seems that my scenario is validated. EURUSD 1.3670-resistance held for now, USDJPY initially fell below the morning's range 92.05-92.25, returned back up, before continuing lower.
If you look at the daily charts, during trending times we've already had the "average" upmove for the day, and any more upside is thus unlikely today. I see a 1.3585-1.3650 range for the rest of today’s session. Longer-term, during trending times it is rare for the market to move more than five to seven sessions in one direction without a consolidation. Perhaps now is the time? Previous consolidations have been around 150 pips wide, and have lasted for five to seven sessions, suggesting a 1.3500-1.3670-range for the next week. And this would still leave the uptrend intact…