US Markets Quiet Ahead of Non-Farm Payrolls
US stock markets were closed yesterday in observance of former President Jimmy Carter’s funeral, but other financial products still traded. US Treasury yields hit fresh highs during the session before ultimately drifting lower. The 10-year yield reached its highest level since April last year before finishing the day 0.4 basis points lower at 4.689%, while the 2-year yield dropped 1.9 basis points to 4.264%. The dollar continued to strengthen, with the DXY adding another 0.1% to close at 109.20. Oil prices jumped higher as continued cold weather in the northern hemisphere drove demand, with Brent up 1.43% to $77.25 and WTI up 1.32% to $74.29. Meanwhile, gold hit a four-week high as safe-haven flows sustained the recent trend, finishing the day up 0.32% at $2,669.59.
Gold to Remain Strong in Uncertain Markets
Gold has been a quiet achiever in the early trading days of 2025, following its best year in 14 years during 2024. It has climbed another 2% since January 1, despite a strong dollar environment, and is now approaching technical resistance that could lead to even higher prices. This likely reflects market nerves ahead of the new US administration taking office in the coming weeks and the uncertainty surrounding potential developments. Technical resistance on the daily chart is now just $10 higher than current levels, and a clean break could pave the way for a challenge of the all-time high of $2,790.15, reached on October 31 last year. Some traders, however, are opting to fade the recent move, aiming to capitalize on the dollar side of the equation as yields rise, with a potential pullback to support near the $2,620 level.
US Employment Data the Focus Today
The focus for traders today will be the US employment data, with very little on the event calendar during the Asian and European sessions. Tight, range-bound conditions are expected ahead of the key data, but once the numbers are released, all bets are off. The headline Non-Farm Payrolls number is expected to show an increase of 164,000 jobs in December, with the unemployment rate remaining steady at 4.2%. Any significant deviation from these expectations could result in large market movements. Canadian employment numbers are also set to be released at the same time but are likely to be largely ignored by most of the market, except for traders focused on the Canadian dollar (loonie). Preliminary University of Michigan data is also due later in the day, but once again, the employment numbers are expected to dominate market sentiment heading into the weekend.
