Economic Calendar – the NFP day

• The NFP is the report of the week
• ISM services, Canadian payrolls fill up the calendar
• Mixed data from Germany
• European markets modestly up, USD gains on Friday morning

Friday started with a package of German data for November:

• industrial orders were down 5.3% m/m and 11% y/y – much worse than expected
• retail sales was +1.1% m/m but still 5.9% y/y – just a notch above 6% expected

Looking ahead we have:

• 10am GMT – flash EMU inflation for December – consensus is 9.7% y/y, although after a series of lower prints from across Europe, market expectations are lower
• 1.30pm GMT – the NFP report – the consensus sees +200k employment, unemployment rate unchanged at 3.7% and wage growth slowing down from 5.1 to 5% y/y – a strong report could embolden the Fed even more and could be seen as positive for the US dollar and negative for US indices and Gold prices
• 1.30pm GMT – the Canadian NFP – expected employment gains of 6.5k with the unemployment rate rising to 5.2% (from 5.1%)            
• 3pm GMT – ISM services – seen declining from 56.5 to still solid 55 points, focus on prices paid index (last at 70 points)

Our comment: the NFP is still “the report” to watch. The Fed sees the inflation coming down from the peak but is worried about price-wage spiral preventing a permanent return to the target. This is why the markets would actually want to see a “weak” report with little employment gains and decelerating wage growth. The sooner it takes place, the sooner the Fed may reverse its restrictive policies.                

US100 is not much above 2022 lows as another “Fed pivot play” failed in December.