The Vegas of FX

4 March, 2016

Someone asked me this week my forecast for the US payrolls number and I said that I didn’t have one. This may seem strange, but the up-shot of it is that this number is very much a lottery. I did spend a fair amount of time trying to forecast it many years ago, but the seasonals and the revisions to back data made it a fairly pointless affair. You could be bang on with the headline change, only to see 100k of upward revisions to the prior months and/or a move in the unemployment rate which would counteract any benefit received from being ‘right’ on the headline number. So, for what it’s worth, the rate is seen steady at 4.9% today, with the headline seen rising 195k, from the previous reading of 151k. The dollar should not be as sensitive to the outcome as was the case a few months ago, because expectations for a near-term move in rates are so low.

The pattern of activity this week in FX markets has been of continued recovery from the predominant themes of the depths of February. So sterling has continued its recovery, with the yen softer and the commodity currencies gaining more vigour, in part helped by the recovery in the oil prices from the lows seen last month. A fair deal of this is recovery from what were seen as over-sold positions in many markets, so we’re getting to the stage whereby the markets will be looking for validation of these new levels in the prevailing data. Today’s US data should play a part in that. It’s interesting to see emerging markets doing well in the current environment, the Brazilian Real (which was hammered last year) up 5% this year, with the Russian rouble and Korean Won also doing well.


Source link  
Risk-On or Risk-Off?

The rhetoric continues between North Korea and the United States with North Korea’s Foreign Minister, Ri Yong Ho, describing President Trump’s recent comments as “tantamount...

German & New Zealand Elections

The results of the German Election have re-elected Chancellor Angela Merkel for a fourth term. Her CDU party won fewer votes than was expected and Chancellor Merkel...

Fed Holds Rates for Now But...

Unsurprisingly, the Federal Reserve kept rates on hold following the end of its 2-day meeting on Wednesday. They did, however, indicate that...


UK Unemployment at 42 Year Low

UK unemployment fell to its lowest level since 1975, data on Wednesday revealed. Unemployment fell by 75K, bringing the unemployment...

US Equities at Record Levels

US equities closed at record levels on Wednesday, as improved risk-on sentiment returned to the markets and news that the US economy...

USD Stabilizes

Hurricane Irma has, reportedly, inflicted less damage on the US mainland than was originally predicted, thereby reducing the economic impact of the devastation it was expected to...


Markets on Edge

With the markets risk appetite dampened after North Korea’s most powerful nuclear test to date, USD and Global equities fell whilst Gold, Yen and Sovereign Bonds all rose....

Risk Appetite Returns

North Korea official news agency reported on Monday that leader Kim Jong Un will watch the actions of the United States for a while longer before making a decision to fire missiles at Guam...

US-Korean Tensions Rattle Markets

Markets were cautious on Wednesday, as safe-haven assets pushed higher after tensions grew between the US and North Korea. Markets are concerned...

  


Share: