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  
Divergence Between Fed and BoJ

The March FOMC meeting will be held for two consecutive days from today. The interest rate decision will be announced at 18:00 GMT on Wednesday 15th March...

Market Volatility Expected Ahead of President Trump's Speech

In a speech that will be watched by millions of viewers in the United States and around the world, the President is expected to speak of his presidency and address pressing issues like his plans for health care, the tax system, the military, and his goals for his administration...

Gold Trades Below Resistance Ahead of the Fed and NFP

We will see the release of the US ISM Manufacturing PMI, and ISM Prices Paid for January, at 15:00 GMT on Wednesday 1st February...


Sterling Struggles Ahead of Theresa May's Speech

Theresa May will make a speech outlining her plans for Brexit tomorrow, Tuesday 17th Jan, before the UK triggers Article 50 to leave the EU...

Dollar Turn-around on Trump's Press Conference

President Elect Trump's first press conference after his victory in the US presidential election, was held yesterday around at 16:00 GMT. It has caused great volatility to the dollar and the markets...

Gold Nears Major Resistance Ahead of Trump’s Press Conference

Gold prices have rebounded since mid-Dec after testing the significant support line at 1120. On the 4 hourly chart, gold bullish momentum has been strengthened since the beginning of this year, helped by the dollar retracement...


Searching for a new narrative

Popcorn at the read today as President elect Trump has a scheduled news conference later in the day (around 16:00 GMT). Markets have become used to listening to him in 140 characters or less over the recent weeks, so a more elongated narrative should be welcome...

The sterling conundrum

Yesterday's early weakness in sterling, on the back of the latest comments from PM May surrounding Brexit, took cable close to key support levels and the resilience seen through most of the post US election period has been unwound...

Selling into USD strength

In summary, Friday US jobs report was pretty much in line with expectations, although the slightly better data on earnings gave some support to the dollar into the end of the week. As a result, the US currency was little changed from Tuesday opening levels...

  


Share: