Forex Today: Euro area inflation data and US jobs report in the limelight
Here is what you need to know on Friday, January 5:
Following Thursday's indecisive action, the US Dollar (USD) started to gather strength against its major rivals early Friday. Eurostat will release the December Harmonized Index of Consumer Prices data, the European Central Bank's (ECB) preferred gauge of inflation, for the Euro area. Later in the day, December jobs report, which will include Nonfarm Payrolls and wage inflation figures, will be featured in the US economic docket.
US NFP Forecast: Nonfarm Payrolls expected to grow below 200K in December for third straight month.
The data from the US showed on Thursday that employment in the private sector rose by 164,000 in December, surpassing the market expectation for an increase of 115,000. Additionally, the Department of Labor reported that there were 202,000 first time applications for unemployment benefits in the week ending December 30, down from 220,000 in the previous week. The benchmark 10-year US Treasury bond yield climbed above 4% after these data and the USD Index erased earlier losses to close the day virtually unchanged. Early Friday, the 10-year yield holds steady above 4% and the USD Index clings to modest gains above 102.50.
US Dollar price this week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 1.16% | 0.49% | 0.89% | 1.79% | 2.92% | 1.56% | 1.28% | |
| EUR | -1.01% | -0.51% | -0.12% | 0.80% | 1.78% | 0.58% | 0.20% | |
| GBP | -0.50% | 0.51% | 0.42% | 1.28% | 2.52% | 1.08% | 0.70% | |
| CAD | -0.90% | 0.09% | -0.23% | 0.87% | 2.03% | 0.65% | 0.32% | |
| AUD | -1.81% | -0.78% | -1.30% | -0.90% | 0.98% | -0.21% | -0.57% | |
| JPY | -2.99% | -1.78% | -2.48% | -1.87% | -0.97% | -1.21% | -1.82% | |
| NZD | -1.60% | -0.58% | -1.10% | -0.69% | 0.23% | 1.22% | -0.36% | |
| CHF | -1.21% | -0.20% | -0.71% | -0.29% | 0.61% | 1.71% | 0.38% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
EUR/USD registered small gains on Thursday but failed to gather recovery momentum during the Asian trading hours on Friday. At the time of press, the pair was trading in negative territory below 1.0950. Germany's Destatis reported early Friday that Retail Sales declined by 2.5% on a monthly basis in November, following the 1.1% increase recorded in October. Annual HICP inflation in the Euro area is forecast to rise to 3% from 2.4% in November.
GBP/USD climbed above 1.2700 on Thursday but retraced its daily rally in the American session to close below 1.2700. The pair stays on the back foot early Friday and retreats toward 1.2650.
The data from Japan showed that the Consumer Confidence Index improved to 37.2 in December from 36.1 in November. Other data revealed that the Jibun Bank Services PMI was 51.5 in December, slightly below the flash estimate of 52. USD/JPY extended its uptrend and climbed above 145.00 for the first time in three weeks on Friday.
Gold lost its traction after testing $2,050 on Thursday and retreated to the $2,040 area. With the 10-year yield clinging to its weekly gains, XAU/USD finds it difficult to stage a rebound early Friday.