In December, non-farm employment increased by only 148k, less than expected 190k. Wages increased by 0.3% m/m, maintaining the annual dynamic at 2.5%. The unemployment rate remained at 4.1%, as expected. For the market participants, employment is of secondary importance, but the lack of a positive surprise in wages strikes the optimism built after good ISM and ADP data.
December's data puts into question the date of another interest rate hike in the US and supports cautious rhetoric among the FOMC's members in this regard. Moreover, this week, market attention will be focused on inflation data. First of all, global investors will find out how the price dynamics in large economies such as China and the US were shaped in December. The inflation data will be the very important because without a spike in inflationary pressures there is no chance of sustained hawkish rhetoric among the Fed's members. In addition, in view of the continuing divergence between the monetary policy of the Federal Reserve and the European Central Bank, it is also worth noting the minutes from the last meeting of the ECB. Most likely, expectations regarding core inflation developments will be crucial for the timing of changes in the monetary policy of the euro area.
Let's now take a look at the USD/JPY technical picture on the H4 time frame. The market tried to rally above the technical resistance at the 113.50 - 113.74 zone, but bulls were too weak to perform this rally and the price only tested the internal golden trend line and reversed. The momentum is still quite strong, but the market conditions are becoming overbought at this time frame, which suggests a pullback towards the level of 112.50.
