Weekly Forex Market Rhythm | December 6, 2013

EUR/USD Daily Chart | Dec 6, 2013

NFP stronger than expected, but was not enough

Euro zone bonds rose across the board on Friday, recouping some of this week's losses as U.S. jobs data came in above forecast but was not considered strong enough to prompt an immediate scaling back of U.S. stimulus, and as the European Central Bank gave no hints that further monetary easing was imminent.

The U.S nonfarm-payrolls rose 203k in November, modestly above the expected 180k increase. Revisions brought the October number down 4k to +200k and September up 12k to +175k. The unemployment rate sank to 7.0% (a new five-year low) from 7.3% as household survey figures remained volatile.

The continued moderately strong jobs reports, now looking more like they're satisfying the Fed's criteria of substantial, sustainable improvement, should be calming nerves at the Fed and pulling forward the schedule for tapering.

The 3-month average growth rate in nonfarm payrolls declined to +193k from +204k. It's still better than the +180k 6-month average and +189k YTD average, but still a little short of where some Fed doves would like to see it. While the 203,000 U.S. jobs print was above consensus in a Reuters poll, it was well within the 125,000 to 230,000 forecast range. (reuters)

Sterling up on strong housing data, shrugs off U.S. payrolls 

GBP/USD Daily Chart | Dec 6, 2013

Sterling gained on Friday after a report showed British house prices rose more than expected last month, reinforcing optimism about the economy and expectations that monetary policy tightening will be brought forward.

House prices rose at their fastest pace in more than six years in November but could slow as weak wage growth pressures personal finances, mortgage lender Halifax said on Friday.

Average house prices in the three months to November were 7.7 percent higher than a year earlier. (reuters)

EUR/GBP 4 Hour Chart | Dec 6, 2013

Euro Hits December Highs as ECB Downplays Policy Pivot

Talking points:

- ECB keeps rates on hold, no LTRO.

- Euro initially slips, but soon rallies to fresh December highs versus Australian, US Dollars

- ECB likely on hold through early-1Q’14.

The European Central Bank left its monetary policy firmly on hold today, offering a change in neither the key benchmark interest rate nor the deposit facility rate. After the surprise 25-bps cut last month to the main refinancing rate, the ECB determined that the policy change was already having a positive impact given incoming price and survey data. (source: yahoo finance)

USD/JPY Weekly Chart | Dec 6, 2013

Dollar rises VS Yen after U.S strong jobs data

The dollar rose against the yen on Friday after stronger-than-expected U.S. jobs data raised chances the Federal Reserve may start paring its bond buying program sooner than expected.

The central bank has been buying $85 billion in Treasury and mortgage-backed bonds each month to hold long-term borrowing costs down in a bid to spur a stronger economic recovery.

A reduction in these purchases would lift U.S. bond yields, boosting the dollar.

Still, some analysts doubted the report was strong enough to push the Fed to move when policymakers meet on Dec. 17-18. Many said the central bank was still likely to hold off reducing its purchases until January or March to ensure the economy was on solid ground. (reuters)