U.S. and Canada Employment Statistics Under Spotlight! "Key Points and Event Schedule for January 10"

Middle East risk seems to be fading, the market is risk-on, and USD/JPY has risen to around 109.60, returning to the pattern seen at the end of last year.

I don’t think the risk has completely disappeared, so personally I feel a sense of unease, but the market is continuing to rise on risk-on momentum, using previously risk-off positions as a stepping stone.

Today is the 50th day and Japan has a three-day weekend, so actual demand activity is expected to pick up.

We should watch around the fixing level, the FIX, and the NY close.

Also, since risk has not completely disappeared, I would like to make sure to adjust positions heading into the weekend.

◎ Today's Points of Focus

1) Employment Data

Today is the US and Canadian employment data.

U.S. employment data are expected to be strong because the ADP employment data have been showing good results, with nonfarm payrolls expected to be about 160,000, unemployment rate expected at 3.5%, and average hourly earnings at about 0.3% rise, so there is a possibility the official figures could beat expectations.

As risk-off markets retreat and risk-on resumes, stronger-than-expected results could provide a tailwind for dollar buying.

Conversely, if the numbers come in weaker than expected but not extremely weak, dollar selling may be limited under the current trend.

Personally, I am watching the unemployment rate closely.

I think unemployment is one of the first indicators to worsen when an economy slows, so I’m watching whether the unemployment rate deteriorates.

Canadian employment has been weak in the prior two reports, so I’m curious whether this time the result will be strong.

With expectations around 25,000 jobs, if the result turns negative, I think CAD may come under stronger selling pressure.

In particular, if the Bank of Canada, which holds a neutral stance on monetary policy, delivers a weak result, there may be a shift toward easing policy.

2) Middle East Situation

If direct military conflict with Iran is avoided and risk-on returns, USD/JPY would rise and stock markets would stay firm.

However, Middle East risk has not disappeared completely, and there are still many risk factors present.

The U.S. hasn’t used military options because there had not been casualties among Americans; if casualties occur, the situation could change.

There are reports of rockets and shells still landing in Iran, and because control within Iran is not uniform, there is a possibility that American casualties occur somewhere, which could shift markets back to risk-off, so stay cautious.

Also, regarding the Ukrainian passenger plane that crashed in Iran, while Iran stated it was a crisis incident, Canadian Prime Minister Trudeau claimed it was downed by an Iranian missile and has asked for an international investigation.

Some countries, including the United States, aligned with this view, and the possibility of renewed tensions and risk-off movement exists if the investigation props up that claim, so be careful.

3) U.S.-China Relations

Signatures for the first round of U.S.-China agreements are scheduled to start on the 13th, but this is already priced in.

Attention is on what the second round will contain and how quickly negotiations proceed.

Beyond trade talks, the U.S. Congress has passed human rights bills concerning Hong Kong and Xinjiang, which also warrants attention.

Taiwan’s presidential election is scheduled for the weekend, and Hong Kong protests are influencing the Taiwan election as well.

There is a watchful eye on whether this becomes a flashpoint that could affect Hong Kong protests and U.S.-China relations.

◎ Today's Event Schedule

Friday, January 10

09:30 AUD Retail Sales

15:00 NOK Norwegian CPI (Consumer Price Index)

16:00 TRY Turkish Unemployment Rate

18:30 GBP Timothy Toleboe (Temel Bryce) external BOE Director speech

22:30 USD NFP employment, average hourly earnings, and unemployment rate

22:30 CAD Canadian Employment and Unemployment Rate

Saturday, January 11

02:00 USD Baker Hughes Rig Count