TREX Global:Non-farm payrolls are coming, with a high probability or stronger than expected

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U.S. jobless claims fall to lowest in three months last week, ADP data stronger than expected

The number of Americans filing new claims for unemployment benefits fell to a three-month low last week and layoffs plunged 43 percent in December, suggesting the labor market remains tight and could force the Federal Reserve to keep raising interest rates.
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Initial claims for state unemployment benefits fell 19,000 to a seasonally adjusted 204,000 for the week ended Dec. 31, the lowest level since late September, the Labor Department said. Economists predicted 225,000.

Continuing claims fell 24,000 to 1.694 million in the week ended Dec. 24, after hitting an 11-month high of 718,000 the previous week.

Other data on Thursday also highlighted the resilience of the labor market. Private employers hired far more workers than expected in December. The reports suggest that the economy remains on solid footing by the end of 2022, despite massive layoffs in the technology sector and interest-rate-sensitive sectors such as finance and housing.

The U.S. ADP report showed that private jobs increased by 235,000 in December, compared with an increase of 182,000 in November and an expected increase of 150,000 jobs.

Trade deficit narrows sharply in November

In terms of gross domestic product (GDP), there was more economic news on trade in goods. The Commerce Department report showed that the U.S. trade deficit narrowed 21.0% to $61.5 billion in November, the lowest level since September 2020. The deficit narrowed by the most since February 2009, reflecting a 13-month low in goods imports.

While lower imports would boost GDP, it is also a sign that domestic demand is cooling amid higher borrowing costs. Still, that would offset weaker exports. The narrowing of the trade deficit contributed most to third-quarter GDP growth of 3.2 percent on an annualized basis. Forecasts for economic growth in the fourth quarter were as high as a 3.8 percent annualized rate.

Fed's Bullard: No real reason to change Fed's 2% inflation target

St. Louis Fed President James Bullard said on Thursday that the new year could finally see some welcome relief on inflation.

The Federal Open Market Committee (FOMC), which sets interest rate policy, "has taken aggressive action in 2022 and plans to continue raising policy rates in 2023, which has brought inflation expectations back in line with the Fed's 2 percent objective," Bullard said. Said in the prepared presentation material. "Over 2023, as the real economy normalizes, actual inflation is likely to follow inflation expectations to lower levels."

Fed's George: Keeping rates high for a while after hikes is over is key

Kansas City Fed President Esther George said on Thursday that she wants the central bank to continue its efforts to shrink its balance sheet, while also warning that she believes the central bank needs to raise interest rates further and keep them there for some time after the tightening process is over.

She said in an interview that she thinks the Fed will need to raise the target range for the federal funds rate above 5 percent and stay there "for a while ... until we see a signal that inflation is really starting to convincingly start." Falling back toward our 2% target."

Fed's Bostic: Policymakers 'remain determined' to bring inflation down to 2% target

Inflation is the biggest headwind facing the U.S. economy right now and Fed policymakers "remain determined" to bring inflation down to their 2 percent target, Atlanta Fed President Bostic said on Thursday.

"Inflation in the U.S. is too high ... and the FOMC and I remain determined to use our policy tools to Inflation is back on our target."

"I appreciate the recent report, which included signs of easing price pressures, but there is still a lot of work to be done," Bostic said. "The most recent report showed the Fed's preferred measure of inflation growing at a 5.5% annual rate."

Dollar rises to four-week high on strong jobs data

The U.S. dollar index hit a four-week high on Thursday, closing up 0.84% at 105.13, having earlier hit 105.27, its highest since Dec. 8. Earlier data showed a strong labor market, supporting expectations that the Federal Reserve may maintain an aggressive pace of interest rate hikes.

Technically, the U.S. dollar index has successfully bottomed out near the half-year low of 103.38. The short-term is expected to usher in a wave of rising market. The initial target is around the 55-day moving average of 105.64, and the aggressive target can even be around the 100-day moving average of 108.55.

TREX Global’s view:Many Fed officials tend to further raise interest rates and maintain high interest rates for a long time to achieve the 2% inflation target. Employment data such as ADP and initial jobless claims also provide data support for the Fed to further raise interest rates. The index initially bottomed out in the short term and tends to fluctuate further upwards, which is not good for gold prices. There are also some signs of a peak in gold prices on the technical side. Unless the non-agricultural data in the evening is unexpectedly extremely poor, there is a further downside risk in the short-term gold price. Below, focus on the support around the 10-day moving average of 1820.81 and the 21-day moving average of 1808.00.

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