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Colin Cieszynski

The Before the Bell report is compiled by editors of The Globe and Mail and is updated throughout the morning to reflect latest developments. Colin Cieszynski, Chartered Financial Analyst and Chartered Market Technician, is chief market strategist with CMC Markets.

U.S. stock futures have turned decisively negative in the wake of the U.S. reporting net job gains in January that were less than expected. S&P 500 futures are down nearly half a percentage point after being slightly in positive territory early this morning.

The U.S. added 151,000 net jobs in January, below the consensus of 190,000. Canada's jobs report was also weaker than expected, reporting 5,700 net job losses in January vs. an estimated gain of 6,000. The Canadian dollar initially dipped on the numbers but quickly bounced back, as the greenback also came under pressure against major currencies.

The main focus for traders today is on the nonfarm payrolls and what the report could mean for the Fed's interest rate normalization plans. Although there isn't a Federal Open Market Committee (FOMC) meeting this month, recent speculation on what the Fed may do in March has had such a big impact on U.S. dollar trading this week, nonfarm payrolls is still attracting a lot of attention from traders.

Comments this week from FOMC members suggest three factions emerging at the Fed over what to do next, which could make for a lively discussion over the next six weeks.

A dovish group worried about the impact of overseas market volatility and economic softness on the US economy and apparently willing to slow or stop the pace of rate increases. This includes New York Fed President William Dudley and Governor Lael Brainard. A middle group is taking a wait and see approach which includes Dallas Fed President Robert Steven Kaplan. Meanwhile, there's a hawkish group which understands market volatility is par for the course and part of the transition process following a first rate hike, so there's no reason to change course from the gradual tightening plan. This group includes Cleveland Fed President Loretta Mester and Kansas City Fed President esther George.

At the beginning of this year, the FOMC had been calling for four rate increases this year, but the discussion above shows this has fractured, which contributed to U.S. dollar support finally giving way earlier this week.

A jobs number below 150,000 would have supported the slowdown case. A number of 150,000-250,000 would be more neutral.

The weak jobs number that did arrive means rates are likely to stay low. But the number wasn`t weak enough to meaningfully change the debate on the FOMC`s next actions.

Now, here is a closer look at key market data, and corporate and economic news.

MARKET DATA:

Futures

S&P 500 -0.4 per cent; Dow -0.4 per cent; Nasdaq: +0.4 per cent

Equities
Hong Kong's Hang Seng +0.55 per cent
Shanghai composite index -0.65 per cent
Japan's Nikkei 225 -1.32 per cent
London's FTSE +0.44 per cent
Germany's DAX +0.07 per cent
France's CAC 40 +0.51 per cent

Commodities
WTI crude oil (Nymex March) +1.07 per cent at $32.06 (U.S.) a barrel
Gold (Comex April) +0.16 per cent at $1,159.40 (U.S.) an ounce
Copper (Comex March) -0.63 per cent at $2.12 (U.S.) a pound

Currencies
Canadian dollar +0.0026 at 72.77 cents (U.S.)
U.S. dollar index +0.166 at 96.640

Bonds
U.S. 10-year Treasury yield +0.0075 at 1.85 per cent

KEY ECONOMIC RELEASES

U.S. employment gains slowed more than expected in January as the boost to hiring from unseasonably mild weather faded, but surging wages and an unemployment rate at an eight-year low suggested the labor market recovery remains firm. Nonfarm payrolls increased by 151,000 jobs last month and the unemployment rate was at 4.9 per cent, the lowest since February 2008, the Labor Department said on Friday. Data for November and December was revised to show 2,000 fewer jobs created than previously reported. Economists polled by Reuters had forecast employment increasing by 190,000 and the jobless rate steady at 5 per cent.

Canada lost 5,700 jobs in January and the unemployment rate edged up to a two-year high of 7.2 per cent as more people entered the work force, Statistics Canada said on Friday. Analysts polled by Reuters had forecast a gain of 5,500 positions and for the unemployment rate to stay at 7.1 per cent. The last time the jobless rate hit 7.2 per cent was in December 2013. The data underline the economy's struggles to cope with the effects of low oil prices. In the year to January, employment increased by an anemic 125,500 jobs, or 0.7 per cent. The jobless rate in the energy-producing province of Alberta rose to 7.4 per cent, the highest since February 1996.

Canada's trade deficit unexpectedly shrank to $585 million (Canadian) in December from $1.59 billion in November as exports jumped by a healthy 3.9 per cent. Analysts polled by Reuters had forecast a deficit of $2.2 billion. December marked the 16th consecutive monthly trade deficit, reflecting damage to the economy caused by slumping crude prices.

The U.S. trade deficit widened in December as a strong dollar and weak global demand continued to weigh on exports. The Commerce Department said on Friday the trade gap rose 2.7 percent to $43.4 billion (U.S.). November's trade deficit was revised down to $42.2 billion from the previously reported $42.4 billion. Economists polled by Reuters had forecast the trade shortfall widening to $43.0 billion in December.

(10 a.m. ET) Canada Ivey Purchasing Managers' Index for January

KEY CORPORATE NEWS

Earnings include: Ametek Inc.; Aon PLC; Brookfield Property Partners LP; Cameco Corp.; CME Group Inc.; Colliers International Group Inc.; Domtar Corp.; Moody's Corp.; Tyson Foods Inc.; Weyerhaeuser Co.

Also see: Friday's small-cap stocks to watch

With files from wire services

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