Non Farm Payroll – 8th Jan 2010
Ours and the market’s focus today will be on NFP release, 830 am, NY time, 930 PM SG time.
There has been a general bullishness about the USD lately, since Dec to be exact. It was timed along with the US Federal Reserve Meeting talking up about having an exit strategy for their quantitative easing policies(QE). I believe it is more hype than action. The Fed had also talks about possible interest rate hikes during the later quarters of this year. This will not just reinforce its status as a “safe-haven” currency but also as an investor attractive option with better yields. A double dip recovery might not be what the market wants and a strong statement right at the start of the year could get one of the largest economies out of recession. Again, i feel that this is flak. The Fed cannot afford to raise interest rates as yet unless a few other fundamentals shift their way. I will leave those for a later post when i have more juice. With the previous NFP release, retail sales and labor data, the figures are more in line with the economy recovering which is doing more good than what just the govt has been talking about.
Bottomline, the market is expecting a positive release of the upcoming NFP data. Expectation is at -3k, which is a far cry from -467k just 6 months ago. This has caused a major trend of the USD upsurge during last year end. In fact, payrolls have now stood above their 3-month moving average for 4 straight months.
What is more challenging is to deliver another positive month which will totally bolster the USD in the black. I doubt this will happen. I feel that the expectations are too high and with that not being met, USD might trickle down into its bearish mode back again which will set the theme of its decline for the year as a fundamentalists projection. I have a gut feel that the last data was heavily one-sided and it was a fluke which has caused the sentimental surge.
In anycase, i will only act mechanically based on data i see or pre-news sentiments, if it unfolds. The charts are already showing that the market foresees USD strength, which can be a total disappointment. Therefore, be careful and trade what you see, not what you believe.
Bottomline: Bias for USD weakness. Will wait for market whipsaws to settle before seeing real direction, if any. (Gbp,Eur,/Usd)
Sell Condition : If above 30k
Buy Condition : If below -75k
Note that unemployment rates comes in at the same time, so a conflict of data will cause irrational behaviour.
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Seeni J G
Over-optimism it was indeed, as numbers came out a -84k instead of the expected -3k.
We did see some immediate weakening of USD against most majors but it was quickly stabilized. The lows/high of immediate effects taken in the first 45-60mins, set the eventual price zones for the day. Positive unemployment rate did help, albeit with a negligible margin, to perhaps ease fears that things are indeed on the longer road to recovery, though the road just seems a bit longer than what last month’s data projected.
great post bro.