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  
Market shows demand for yielding assets

The market shows demand for yielding assets, which in turn supports demand for the stocks and currencies of emerging markets. The main...

Yuan and Dollar as a weapon in trade wars

The US Nonfarm Payrolls on Friday could even be called boring: the report showed the preservation of a completely healthy labour market...

Disappointment with Fed and tariffs

Trump announced 10% tariffs on Chinese goods worth $300 billion since September 1, thus ending the US-China trade truce after disappointingly...


Fed pushes down stocks

Markets have started the week under pressure. Expectations that the Federal Reserve will cut interest rates by 50 points in July collapsed...

Gold updates new 6-years highs

Gold benefits from a combination of two factors: lower interest rates in debt markets and continuing hopes that the global economy...

Markets recede from the recent highs

A strong Nonfarm Payrolls caused pressure on the stock markets, reducing the chances of the interest rates lowering by the Fed in the upcoming months...


Gold resumes rally, pushing past $1400

Gold prices resumed a push higher on Monday, as flows into the precious metal continued on improved prospects for easier monetary policy from...

Gold rises as markets slip

Market caution continues to support gold. Quotes of this metal rose to $1337, repeatedly trying to push above this year highs at the 1340-1360 area...

Trump says Brexit should happen

President Donald Trump promised the U.K. a "phenomenal trade deal" Tuesday, on the second day of his state visit to Britain...

  


Share it on:   or