NFP Up Next

The US labour reports for November are due today and will be the main data focus for the week. On the back of the Fed’s tapering announcement in November and with inflation and other indicators pointing higher, a positive reading today has the potential to ignite tapering expectations for December. However, given the uncertainty around the new COVID variant, it would likely take a very strong set of numbers to see USD trading sharply higher. Given that most health authorities warn it will take at least a few weeks to assess the severity of the Omicron, it seems reasonable to think that the Fed will look to refrain from further tightening. That is, of course, unless the data makes it very difficult not to.

With the market looking for mid 500k on the NFP, a reading over 600k will be the best news for bulls. The unemployment rate is forecast to tick lower again, down to 4.5%. However, it would be a strong beta on the hourly earnings number that could really be interesting. If earnings are seen sharply higher, this might be the biggest incentive for the Fed to taper further this month and would likely see USD trading higher near term.

Where to Trade US Labour Reports?

USDCAD

The rally in USDCAD has seen price trading up to just shy of the major 1.2885 – 1.2952 resistance zone. This is a huge band of resistance for the pair and a break higher here would open the way for a much fuller bullish reversal targeting 1.3079 initially and 1.3239 as a longer-term level (the ABCD completion level).