The USD is the strongest and the JPY is the weakest as the North American session begins

As the North American session begins, the USD is the strongest and the JPY is the weakest. The market awaits the dual jobs reports. Both the US and Canada jobs reports will be released at 8:30 AM ET. The following is estimated for the US major components from the BLS report.

• Non-Farm Payrolls (Dec): Expected at 170k, previous at 199k.
• Private Payrolls (Dec): Forecasted at 130k, previous at 150k.
• Manufacturing Payrolls (Dec): Anticipated at 5k, previous at 28k.
• Government Payrolls (Dec): Previous figure was 49k.
• Unemployment Rate (Dec): Expected to be 3.8%, which is an increase from the previous rate of 3.7%.
• Average Earnings MM (Dec): Predicted at 0.3%, previous at 0.4%.
• Average Earnings YY (Dec): Expected at 3.9%, previous at 4.0%.
• Average Workweek Hours (Dec): Forecasted to remain steady at 34.4.
• Labor Force Participation (Dec): Previous figure was 62.8%.
• U6 Underemployment (Dec): Previous figure was 7.0%.
• Average Hourly Wages Permanent (Dec): Previous figure was 5.00%.

Yesterday, the ADP nonfarm employment change came in higher than expected at 164K versus 120K. Within the report was the median change in annual pay for job stayers and job changers. Looking at the chart below, the job changers from changing job has been nearly halved from the high above 16% in 2022. It showed a gain of 8%. The job stayers pay raise is also declining. It came in at 5.4% versus 5.8% the previous month. Its high watermark was 7.9%. The “heat” in the job market is cooling off.

It is the beginning of the year and the good news is not being rewarding. Instead, the markets are anxious after oversized gains in 2023. The Nasdaq index is now down for 5 consecutive days, and the S&P is down for 4 straight days The Nasdaq index is now down -4.3% (from the close yesterday) since its December 28 peak. US yields are moving higher with the 10-year now back above 4.00%. The low reached 3.78% on December 27. The dollar index DXY is up 2.07% since December 28.

Today, pre-jobs the US stocks are lower. The USD yields are higher. The USD is higher. The beat goes on ahead of the data. European shares are down as well with yields higher too despite some favorable flash CPI data. EU flash headline inflation YoY came in lower than expected at 2.9% versus the 3.0% estimate. However, it was higher than the previous months 2.4%. In contrast, the core inflation YoY came in as expected at 3.4% but was down from 3.6% last month.

What is expected from the Canadian jobs report?

• Employment Change (Dec): Expected at 13.5k, previous at 24.9k.
• Unemployment Rate (Dec): Anticipated at 5.9%, previous at 5.8%.
• Average Hourly Wages Permanent (Dec): Previous figure was 5.00%.
• Full-time employment: last month 59.6K
• Part-time employment: last month -34.7K

A snapshot of the markets as the North American session begins currently shows:

• Crude oil is trading up $0.60 or 0.83% at $72.79. At this time yesterday, the price was at $73.50
• Gold is trading and $4.02 or -0.20% at $2039.31. At this time yesterday, it was trading at $246.27
• Silver is trading up unchanged at $23.00. At this time yesterday, it was trading at $22.97
• Bitcoin traded at $43,996. At this time yesterday, the price was trading at $43,420.

In the premarket for US stocks, the major indices are trading lower after a mixed close yesterday. The pattern continued yesterday with the Dow Industrial Average moving marginally higher. Both the S&P and NASDAQ index fell. The Nasdaq index has been down over 5 consecutive days. The S&P is down 4 consecutive days. The NASDAQ has lost -0.56%, -1.63% and -1.18% and -0.56% over the last four trading days. That is not a good start to the new year.

• Dow Industrial Average futures are implying a decline of 62.34 points. Yesterday the index rose 10.15 points or 0.03% 37440.33
• S&P futures are implying a decline of -10.68 points. Yesterday the index fell -16.13 points or -0.34% at 4688.69
• Nasdaq futures are implying a decline of -54.02 points. Yesterday, the index fell -81.92 points or -0.56% at 14510.29

In the European equity markets, the major indices are all trading lower:

• German DAX, -0.75%. Yesterday the index rose 0.48%.
• France CAC -1.05%. Yesterday the index rose 0.52%.
• UK FTSE 100 -0.85%. Yesterday the index rose 0.53%.
• Spain’s Ibex -0.89%. Yesterday the index rose 1.28%.
• Italy’s FTSE MIB -0.58% (delayed by 10 minutes). Yesterday the index rose 1.01%

Shares in the Asian Pacific markets were mostly lower:

• Japan’s Nikkei 225, +0.27%
• China’s Shanghai composite index , -0.85%
• Hong Kong’s Hang Seng index, -0.66%
• Australia S&P/ASX, -0.07%

Looking at the US debt market, yields are trading higher:

• 2-year yield 4.412%, 3.0 basis points. Yesterday at this time, the yield was at 4.349%
• 5-year yield 4.020% +4.8 basis points. Yesterday at this time, the yield was at 3.936%
• 10-year yield 4.04%, +4.9 basis points. Yesterday at this time, the yield was at 3.953%
• 30-year yield 4.19% +5.5 basis points. Yesterday at this time, the yield was at 4.106%
• The 2-10 year spread is at -37.2 basis points. At this time yesterday, the spread was at -39.2 basis points
• The 2-30 year spread is at -22.3 basis points. At this time yesterday, the spread was at -24.0 basis points

In the European debt market, the benchmark 10-year yields are higher: