• The ADP Employment Report revealed net job growth in December that was a little below expectations, at 153k versus the 170k median forecast.
• The breakdown had service-providing industries contributing 169k, on a strong surge in trade / transport / utilities, where payrolls rose 82k. That’s the largest gain in 11 years. Excluding that category, however, we had the second-weakest rise in almost four years, with very weak hiring in professional and business services (+24k, a seven-month low), a below-trend rise in leisure and hospitality (+18k), and a tie with last month for the lowest rise in healthcare payrolls since March 2014 (+26k).
• Goods-producing payrolls were down 16k, a four-month low, with a drag from every major subsector. Construction slipped 2k, natural resources fell 5k (25th decline in a row), and manufacturing was down 9k. Factory hiring is disappointing, given how sentiment appears to have improved since the election, construction job growth doesn’t seem to match the spending figures, and the natural resources labor market is also a little softer than one might expect from the rig count numbers. We do expect positive numbers from goods-producing industries in the near future.
• Initial jobless claims filed in the week ended December 31 were 235k, a 28k drop from the prior week’s downwardly revised level of 263k (previously 265k). That was the lowest claims count since the November 12 week (233k) and lowered the 4-week moving average to 256.8k, from 262.5k last week. We urge caution in interpreting the significance of the decline, given that holiday periods bring profound volatility to claims prints.
• All eyes on Friday were on non-farm payrolls, expected to have increased by 178k jobs last month after a similar rise in November. The U.S. unemployment rate, though, is forecast to tick up to 4.7% from a nine-year low of 4.6% in November.
• The EUR/USD went up yesterday after slightly-weaker-than-expected ADP data. This suggests that the potential for further USD rally is low. In yesterday’s Market Overview we were writing about a risk of a shooting star candle, but we saw a high white candle at the end of the day. That is why we have decided to place a buy order at 1.0570 in our Trading Strategies Summary. We think that the EUR/USD may break above 1.0700 if today’s non-farm payroll data are below forecasts.

USD/CAD: Profit taken on short position at 1.3220, looking to sell again at 1.3330

• The CAD strengthened to a three-week high against the USD on Thursday as oil prices rose and the greenback lost ground against a basket of major currencies.
• Prices of oil, one of Canada’s major exports, were lifted by news that Saudi Arabia had cut production to meet OPEC’s agreement to reduce output.
• Statistics Canada said that Canadian producer prices rose 0.3% in November from October on higher prices for motorized and recreational vehicles and primary non-ferrous metal product. The increase followed a 0.7% advance in producer prices in October.
• Canada’s trade report for November and employment report for December are due on Friday.
• We took profit on the USD/CAD short at 1.3220 and our new strategy for this pair is to sell at 1.3330. We are looking to open also a long-term position at that level.

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