The first major economic data of 2026 is about to be released! The US December Non-Farm Payrolls report will be announced on Friday at 21:30. This marks the first data release at the regular time since last September, potentially shifting market focus away from geopolitical tensions back to economic data and interest rate prospects. Employment data released this week has been mixed, but the overall labor market environment appears noticeably weaker. · US November JOLTs plummeted to 7.15 million, hitting a 14-month low. The ratio of job openings to unemployed persons fell to 0.91, the lowest since March 2021. · ADP data showed the US private sector added 41,000 jobs in December, higher than the previous figure but slightly below expectations. However, there have been four instances of negative growth from June to present. The correlation between ADP and NFP is low, limiting its predictive value. · Initial jobless claims for the last week rose slightly to 208,000, up from a previous 200,000, although the four-week moving average declined significantly. For tonight's NFP report, the market expects an addition of 60,000 jobs, compared to a previous 64,000. The unemployment rate is forecast to drop from 4.6% to 4.5%, while wage growth is expected to accelerate to 3.6%.
It is noteworthy that due to a government shutdown, the October and November NFP data were combined and released on December 17th. Potential statistical errors during that reporting period necessitate close attention to revisions of the past two data points. From the Federal Reserve's perspective, downside risks in the labor market are a consensus view. While maintaining their forecast for one rate cut this year at the December meeting, significant internal divergence persists, which tonight's data is unlikely to resolve. Meanwhile, interest rate markets are decidedly more dovish, pricing in two cuts this year, with a high probability of no action at the January 28-29 meeting. The next potential cut may not occur until June. From a market standpoint, traders are clearly cautious ahead of the first post-holiday NFP release. Equities and precious metals have slowed their ascent, while Bitcoin continues to hover below $94,000. If tonight's data falls short of expectations, it could boost rate cut bets, potentially benefiting risk assets like stocks and cryptocurrencies. Gold and silver might also challenge their historical highs again. Conversely, a stronger report could fuel a sustained rebound for the US Dollar Index. A mixed jobs report would place greater emphasis on the unemployment rate, a key Fed focus. Should the unemployment rate rise to 4.7% or higher, the probability of a January rate cut could increase substantially. The chart below shows the last 12 NFP releases and corresponding market reactions, for reference only.
XAUUSD 1-Hour Source: TradingView, Forex.com Gold has formed a series of lower highs at 4550, 4500, and 4485, creating temporary resistance. Trading may be dominated by consolidation and adjustment ahead of the NFP release. The 4445 level remains initial support and a key battleground; a break below could lead to a retest of this week's low around 4400/13. A definitive top reversal pattern has not yet emerged for gold. However, as it has entered a high-level consolidation phase, while buying on dips remains a strategy, note that any upward movement may be constrained by the trendline. A break above this line would open a challenge to the historical high of 4550.
USDJPY 4-Hour Source: TradingView, Forex.com USD/JPY has been in a converging consolidation pattern since year-end. Despite showing a mild uptrend across various timeframes, it faces temporary resistance near 157 from two trendlines on the 4-hour chart. A moderate pullback could present buying opportunities, with the previous high of 157.80 as a key target and resistance. A decisive break above this level may prove difficult, as approaching the 158-162 zone could raise risks of central bank intervention. Macroscopically, the Bank of Japan's gradual rate hikes are unlikely to quickly alter the reality of negative real interest rates in Japan. Their supportive effect on the Yen will also be diluted by large-scale domestic fiscal stimulus, suggesting the Yen may remain weak. CFTC speculative positioning data indicates a neutral stance among traders towards the Yen.
JP225 Nikkei 225 Index 4-Hour Source: TradingView, Forex.com The Nikkei 225 index has found support again in the 51,200-51,500 zone. The immediate focus is on the rebound direction, with the index currently only about 2% away from its historical high. A weak Yen and recent performance in European and US stock markets are bolstering buyer confidence. On the downside, a break below the trendline would increase the likelihood of a double-top pattern, potentially leading the index to seek support around 50,600-50,700.
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