Details Cookies
Important margin product information
CFDs and forex spot transactions are complex instruments and come with a high risk of losing money rapidly due to leverage. 74% of retail investor lose money when trading CFDs and/or forex spot with this provider. 0.56% of retail clients trading in leveraged products experience a negative account balance after a stop out occurred. You should consider whether you understand how CFDs, forex spot transactions or any of our other products work and whether you can afford to take high risk of losing your money.
Cookie policy

This website uses cookies to offer you a better browsing experience by enabling, optimising and analysing site operations, as well as to provide personalised ad content and allow you to connect to social media. By choosing “Accept all” you consent to the use of cookies and the related processing of personal data. Select “Manage consent” to manage your consent preferences. You can change your preferences or retract your consent at any time via the cookie policy page. Please view our cookie policy here and our privacy policy here

Financial Markets Today: Quick Take – January 6, 2023 Financial Markets Today: Quick Take – January 6, 2023 Financial Markets Today: Quick Take – January 6, 2023

Financial Markets Today: Quick Take – January 6, 2023

Macro 6 minutes to read
Saxo Strategy Team

Summary:  A strong surge in the ADP measure of December US private payrolls triggered a surge in the US dollar as the market was forced to market Fed policy expectations higher for longer this year. The jump in yields spooked risk sentiment, sending equities lower and making it likely that the markets will celebrate a weak US jobs report today and sell-off on strong data on the implications for further Fed policy tightening. In China, the yuan outpaced a strong US dollar on further support measures from the government, with hopes for more to come.

What is our trading focus?

Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I)

Good news is bad news it seems in 2023 as very strong US labour market data the past two days culminating yesterday with very strong initial and continuous claims, and strong ADP figures for December ahead of today’s Nonfarm Payrolls release. S&P 500 futures reacted negatively, declining 1.2% to a close at the 3,829 level at the lower end of the recent trading range. Strong US economic data suggests that the Fed is being confirmed that policy rates must remain higher for longer and the market is not priced for that. These are the early signs of what could be in store for equity investors in the first half of the year.

Hong Kong’s Hang Seng (HIF3) and China’s CSI300 (03188:xhkg)

Hong Kong stocks consolidated in a choppy session. Shares of Chinese developers surged in the morning session, following China’s central bank and bank regulator jointly issued a directive to allow banks in cities with declining home prices to lower mortgage interests below the floor dictated current policies. Stocks however turned to the south after the lunch break. Hang Seng Index was 0.8% lower at the time of writing. Alibaba Health (00241:xhkg), Meituan (03690:xhkg), and Haidilao (06862:xhkg) were among the biggest losers with the Hang Seng Index. EV stocks fell, following the news that Tesla China has cut again the price of its Model 3 and Model Y in China within three months from the prior price cut. China’s CSI300 oscillated between small gains and losses, with tourism, education services, and pharmaceutical names being laggards.

FX: USD rallies sharply on strong December ADP private payrolls print

The US dollar jumped higher on the release of the December ADP private payrolls data, a series that had mostly shown a steady decline in payrolls growth since last spring (more below). Yields at the short end of the US yield jumped as the market was forced to consider the risk of the Fed keeping rates higher for longer this year. The more important official data US jobs (and earnings) data for December is up today (see preview below). USDJPY has rallied up to the recent pivot highs near 134.50, EURUSD trades not far from 1.0500, with room to the low 1.0300’s before it tests notable support (the 200-day moving average). Curiously, the Chinese yuan is stronger still, as USDCNH tested below its 200-day moving average overnight, likely on the latest measures supporting the property sector and hopes for more.

Gold (XAUUSD) drops on strong US ADP print

Having surged out of the box earlier in the week, gold bulls got an early reminder yesterday that the this is marathon, and not a sprint. The strong ADP employment report hurt risk sentiment across markets with yields and the dollar rising while gold took a dive. The overall bullish sentiment towards gold has not been changed by one report but it highlights the need to be patient while the FED remains in hiking mode and while the level of peak Fed rate remains unclear. A stronger than expected job report on Friday, however, may have a limited impact given the market, judging by yesterday’s price action, has already started to price in such an outcome. Gold may drop to 1808, the 21-day moving average, and remain in the uptrend that started back in November, and it will be its ability to hold that support on a strong number which will give us the first sign about the underlying strength in the market from investors potentially looking beyond short-term developments.

Copper trades higher as China announces further steps to prop up its property market

Copper together with gold trades up on the week with HG copper surviving a mid-week selling attempt after top consumer China announced further steps to support its beleaguered property sector. China-centric commodities as well as the renminbi popped higher after China’s central bank and bank regulator jointly issued a directive to allow banks in cities with declining home prices to lower mortgage interests below the floor dictated current policies. HG copper remains stuck between two moving averages with resistance at the 200-day at $3.8525 while the 50-day offers support at $3.72.

US treasuries: US yield curve inverts on strong private payrolls data, Fed comments (TLT:xnas, IEF:xnas, SHY:xnas)

US Treasury yields jumped at the front end of the curve on the strong December ADP private payrolls data yesterday, with the 2-year treasury benchmark surging some 10 basis points to 4.45%, its highest level in over a month as the market was forced to price Fed policy tightening higher for longer this year. Adding to the fear of more rate hikes to come was the comment from Kansas Fed President George that she has raised her forecast of terminal rate to over 5% and kept it there well into 2024. Atlanta Fed President Bostic said that “there is still much work to do” to bring inflation back down to the Fed’s 2% target. A rise in the 10-year benchmark Treasury yield did not hold up as well, so the 2-10 yield slope inverted sharply to –74 basis points after trading as high as –46 basis points near the end of last year. Treasury markets will eye the quality of today’s US December jobs report and ISM Services survey (preview below).

What is going on?

Energy sector on track for large weekly loss led by natural gas

Global growth and China Covid-19 concerns, a robust US job market pointing to further pain on the rate hike front, and not least mild winter weather across the northern hemisphere have all helped drive the Bloomberg energy index sharply lower during the first week of trading. Led by losses in natural gas prices, with US Henry Hub down 16.5% while in Europe, the Dutch TTF futures has lost 9%. Crude and fuel products have lost around 8% this week on continued concerns over the near-term demand outlook. A focus being supported by Saudi Arabia’s decision to cut its prices for crude to Europe and Asia in February amid tepid demand and competition from cheap Russian oil looking for a home, especially in Asia. A first week that confirms our view about a challenging Q1 before demand eventually recovers as the Covid cloud starts to lift in China.

Strong ADP Employment data and declines in jobless claims point to a resilient U.S. labour market

The ADP employment report came in much stronger than expected with a gain of 235K jobs in the U.S. private sector employment in December versus the consensus estimate of 150K. The job gain in November was also revised up to 182K from the previously reported 127K. Service sector jobs increased by 213K, led by the leisure and hospitality industry with a job gain of 123K. Being consistent with the strength of employment growth in the ADP report, initial jobless claims fell to 204K (below the 225K expected) in the week ended Dec 31, 2022, from 223K (previously reported at 225K) the prior week. Continuous claims also fell to 1694K, below the consensus estimate of 1728K and the prior week’s 1718K (previously reported at 1710K).

US earnings recap (Walgreens Boots Alliance and Conagra Brands)

Walgreens Boots Alliance (WBA) shares declined 5% yesterday as the drug and pharmacy chain due to rising legal costs despite an otherwise upbeat revenue outlook relative to consensus. WBA guides FY23 EPS of $4.45-4.65 vs est. $4.51 and revenue of $133.5-137.5bn with Summit Health deal. Conagra Brands rose 3% yesterday as the packaged food company delivered Q2 (ending 30 November) revenue of $3.3bn vs. $3.28bn and adj. EPS of $0.81 vs. $0.66 driven by much stronger than expected operating margin of 17% vs. 14.7%.

Fed’s Bullard delivered a presentation titled “The Prospect for Disinflation in 2023”

St. Louis Fed President James Bullard delivered a presentation “The Prospect for Disinflation in 2023” at an event organized by the CFA Society of St. Louis. Bullard’s remarks were less hawkish than his previous comments and those made by Fed presidents George and Bostic earlier on the same day. He said, “while the policy rate is not yet in a zone that may be considered sufficiently restrictive, it is getting closer”. He also added that “the front-loaded Fed policy has helped market-based measures of inflation expectations return to relatively low levels” and “these factors may combine to make 2023 a disinflationary year” as “during 2023, actual inflation will likely follow inflation expectations to a lower level as the real economy normalizes”.

German trade data confirm the risk of a recession

Without much surprise, German export weakness continues. Exports dropped by 0.3 % month-over-month after a decrease of minus 0.6 % in October. Imports are also falling during the same period. On a yearly basis, exports are still up 13 %. But this figure is in nominal terms. Corrected for inflation, the situation is much grimmer. With trade not being any longer a growth driver, this is clear that Germany is heading, like most of the eurozone, towards a recession. In several eurozone countries, expect a mild technical recession (limited macroeconomic impact). But the recession will likely be bigger in Germany, especially due to the strong reliance of the German industry on cheap Russian energy for the past decades.

EZ inflation is set for a temporary drop

December inflation has dropped in the largest eurozone countries (Spain, France and Germany). Expect the eurozone CPI to decelerate as well and to drop single digits for the first time in three months. The economist consensus expects CPI to be out at 9.7 % year-over-year against 10.1 % in November. This is partially explained by a drop in energy inflation (base effects, declining oil and gas prices and government measures in several countries to mitigate the energy bill). Based on advanced data points, we could even have a bigger drop of headline inflation than forecasted. However, this will not imply the European Central Bank will adjust its monetary stance in the short term. Inflationary pressures remain prevalent in most countries. There are also real fears that the drop in energy inflation is only temporary.

US House of Representatives fails again to elect a Speaker of the House

The House has held a total of eleven elections for the position of Speaker of the House, with Republican Kevin McCarthy still unable to change the minds of the small minority of party members who refuse to vote for him. It’s the first stand-off of its nature in some 100 years. Fresh attempts to elect a speaker will resume today.

What are we watching next?

Intraday volatility risk on US jobs data report. December ISM Services also up today

The December US ADP Private Payrolls data was stronger than expected as noted in the FX comments above and the market reaction makes clear that today’s US jobs report could trigger considerable intraday volatility, particularly with the rising use of “Zero Day to Expiry” options on US equity futures, which are options that expire today at the market close. Recent data releases like the November CPI release on December 13th show the potential for tremendous intraday volatility on data surprises that send risk levels soaring as options-related risk balloons on large movements, triggering huge flows. That day, the S&P intraday range was around 4%. Today’s US December nonfarm payrolls change number is expected around +200k, but the market may be leaning a bit stronger after the strong ADP number yesterday. Note that the market will also react to average hourly earnings data (expected +0.4% MoM and +5.0% YoY after +5.1% YoY in Nov.) The “household survey” usually gets little attention, but is still important and has suggested a more stagnant jobs market in terms of the total number of employed people (not necessarily bad news if this is because we are more or less at “full employment” and employers must bid up wages for the limited pool of workers. Ninety minutes after the jobs data, we’ll have a look at the December ISM Services survey after November saw a surprising improvement in the survey to 56.5 after the cycle low of 54.4 in October.

Earnings to watch

Next week the Q4 earnings season kicks off on Friday with banking earnings from Bank of America, JPMorgan Chase, and Citigroup with consensus expecting earnings to continue contracting among US banks before coming back to growth this year.

Next week’s earnings

  • Tuesday: Albertsons
  • Thursday: Fast Retailing, Seven & I
  • Friday: DiDi Global, Aeon, Bank of New York Mellon, Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, UnitedHealth, BlackRock, Delta Air Lines, First Republic

Economic calendar highlights for today (times GMT)

  • 1000 – Eurozone Dec. Flash CPI
  • 1000 – Eurozone Nov. Retail Sales
  • 1330 – Canada Dec. Net Change in Employment / Unemployment Rate
  • 1330 – US Dec. Change in Nonfarm Payrolls
  • 1330 – US Dec. Average Hourly Earnings
  • 1330 – US Dec. Unemployment Rate
  • 1500 – US Dec. ISM Services
  • 1500 – Canada Dec. Ivey PMI
  • 1615 – ECB Chief Economist Lane to speak
  • 1615 – US Fed’s Cook (Voter) to speak
  • 1715 – US Fed’s Barkin (Non-voter) to speak
  • 1800 – US Fed’s George (Non-voter) to speak
  • 2030 – US Fed’s Bostic (Non-voter) to speak

Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app:

Apple Sportify Soundcloud Stitcher


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (
Full disclaimer (

Saxo Bank (Schweiz) AG
Beethovenstrasse 33

Contact Saxo

Select region


All trading carries risk. Losses can exceed deposits on margin products. You should consider whether you understand how our products work and whether you can afford to take the high risk of losing your money. To help you understand the risks involved we have put together a general Risk Warning series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. The KIDs can be accessed within the trading platform. Please note that the full prospectus can be obtained free of charge from Saxo Bank (Switzerland) ltd. or the issuer.

This website can be accessed worldwide however the information on the website is related to Saxo Bank (Switzerland) Ltd. All clients will directly engage with Saxo Bank (Switzerland) Ltd. and all client agreements will be entered into with Saxo Bank (Switzerland) Ltd. and thus governed by Swiss Law.

The content of this website represents marketing material and has not been notified or submitted to any supervisory authority.

If you contact Saxo Bank (Switzerland) Ltd. or visit this website, you acknowledge and agree that any data that you transmit to Saxo Bank (Switzerland) Ltd., either through this website, by telephone or by any other means of communication (e.g. e-mail), may be collected or recorded and transferred to other Saxo Bank Group companies or third parties in Switzerland or abroad and may be stored or otherwise processed by them or Saxo Bank (Switzerland) Ltd. You release Saxo Bank (Switzerland) Ltd. from its obligations under Swiss banking and securities dealer secrecies and, to the extent permitted by law, data protection laws as well as other laws and obligations to protect privacy. Saxo Bank (Switzerland) Ltd. has implemented appropriate technical and organizational measures to protect data from unauthorized processing and disclosure and applies appropriate safeguards to guarantee adequate protection of such data.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.