Employment Gains!
By Mike Conlon | March 5, 2010
In a scene out of the movie, Trading Places, all eyes were on the US Non-Farm Payrolls report this morning. In today’s version of the Frozen Concentrated Orange Juice crop report, the number game in at -36K jobs lost, vs. an expectation of -65K. The unemployment rate also held steady at 9.7%. So what does this mean for the market today? Well right now there is so much market volatility that it’s hard to get a good read.
This should be positive for risk-taking today as the number was just good enough to show economic progress, but not great enough to bring about talk of US interest rate hikes. However, anything can happen on NFP day so traders need to be on their toes! Just take a look at any chart at 8:30EST to see what I mean.
In currencies:
Aussie (AUD): No real news for the Aussie today as it is higher on risk themes and had a nice pop on the NFP report.
Kiwi (NZD): Same deal for the Kiwi as the Aussie, though it’s bouncing much higher as it has been a bit over-sold the last few days. Between Kiwi strength and Yen weakness, that pair is the largest gainer, up 2.18%.
Loonie (CAD): The Loonie is also higher, as the market has decided that risk-taking is the flavor of the day as the market digests the impact of the NFP report. Oil is also higher to just over 81, adding to Loonie gains.
Euro (EUR): What more can be said about the Euro at this point? The Greek crisis is center-stage, with Greek austerity measures angering its citizens, and the potential bailout and contingency plans upsetting the Germans. Quite the balancing act going on there. The Euro is down against all but the Yen.
Pound (GBP): Producer prices came in higher in the UK, and commodity prices are suggesting that they may be experiencing the start of inflation. The increase of 4.1% came in higher than the target rate of 3%, so it will be interesting to see how the BOE handles this situation. The Pound is mixed this morning.
Dollar (USD): I discussed the NFP report above but whether or not the risk-taking theme that has been pushed forward by the forex market continues will remain to be seen. Stocks are expected to see an initial bounce as the futures are higher. However, there is no improvement in the unemployment rate, so market bears may use this opportunity to establish shorts on signs that the economy may be stabilizing but is not improving.
Yen (JPY): The yen is weaker for the second day in a row as it appears as though the market believes the Bank of Japan will boost credit easing. So it appears as though the government may be winning the battle against the Bank of Japan which should weaken the Yen and make it even more attractive as the funding currency of choice for carry traders. It is down across the board this morning.
So while it appears that the market is in a risk-taking mood so far, don’t be so certain that it won’t change its tune by the end of the day. At some point, we are going to have to see actual good news, and not more “less bad”. Unemployment is still extraordinarily high, which will translate over to reduced consumer spending, which makes up some 70% of US GDP.
In my opinion, it would be a fool’s folly to continue to buy stocks and commodities on interest rate policies alone and not fundamentals. At some point this will catch up to the market. It always does.
Good weekend to all!
To learn more about how you can take advantage of world events through the currency market, be sure to check out our currency trading courses!
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No Interest Rate Hikes!
By Mike Conlon | March 4, 2010
As expected, neither the BOE nor the ECB raised interest rates today with the ECB citing fiscal problems in Greece and the BOE putting a hold on further quantitative easing to see if previous measures have been enough.
In other news, US initial jobless claims came in as expected, though all eyes are on tomorrow’s Non-Farm Payrolls report. I’m seeing some mild risk aversion this morning, and again am seeing Canadian dollar strength. Commodities are flat after seeing some gains from the previous days.
In currencies:
Aussie (AUD): The Aussie was down earlier but looks like a rebound may happen today, as news of a narrowing trade deficit and an expected US employment report may outweigh concerns out of the UK and Euro zone.
Kiwi (NZD): The Kiwi is lower this morning as it looks like carry traders are dumping the Kiwi in favor of the Loonie in addition to mild risk-aversion.
Loonie (CAD): The Loonie continues to advance as traders speculate that the economic situation in Canada is in good enough to begin raising rates. The Loonie is fast approaching the 1.02 level to USD and we could see parity by mid-year if interest rates begin to rise in Canada.
Euro (EUR): The sale of Greek bonds is going well this morning as higher yields are attracting investors and the issue is over-subscribed. In the meantime, there is equal outrage in both Greece and Germany although the Germans haven’t taken to streets like the Greeks have—yet. What is happening in Greece is a perfect example of what happens when a government grants its citizens entitlements and then has to take them away because they can’t afford it. I hope the US administration is taking note. Interest rates were held steady and the ECB has decided to not remove economic stimulus at this time.
Pound (GBP): Interest rates have been held steady at .5%, which comes as no surprise to the market. The BOE did make it clear that they will not increase bond-buying to help stimulate the economy. It is clear that the UK sees the need for deficit reduction so the BOE is content to play the “wait and see” game to see if earlier measure have taken hold. There is still increased fear that the UK could be headed for a slide back into recession, and the spring elections are also lingering as fears of a “hung parliament” could cause political non-action.
Dollar (USD): Initial jobless claims came this morning as expected and pending home sales are due out later this morning. We could see some volatility as traders position themselves for tomorrow’s NFP report. The Dollar is mixed this morning.
Yen (JPY): The yen is down across the board this morning as there is talk about a potential sales-tax increase coming from Finance Minister Kan. This would be the first increase in over 10 years and could be a sign that the fiscal situation in Japan is worse than expected. However, this may be a ploy to put pressure on the BOJ to increase bond-buying. Any way you slice it, the Japanese would like to have a weak currency to help exports, and the Yen has been on a tear as of late.
So European themes are dominating the market right now; and Japan is trying to keep the Yen from strengthening. Tomorrow’s NFP report is usually the biggest event for the currency market, as this will give clues as to where the US economy is or may be going, and what the economic response is going to be as a result. This could affect the risk outlook for the rest of the month for as the Dollar is the world’s reserve currency.
To learn more about how you can take advantage of world events through the currency market, be sure to check out our currency trading courses!
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Carnage to Continue?
By Mike Conlon | February 5, 2010
In the wake of yesterday’s market carnage, all eyes were on this morning’s US Non-Farm Payrolls (NFP) report. The market was praying for a decent number to justify a move to the upside, as yesterday was the biggest one day drop we’ve seen in some time. World markets got crushed to the tune of 2.5% on average, and commodities sold off as well. As I correctly called yesterday morning, “Ugly with a capital U”.
So the markets were grasping for any positive news to reverse this down-trend and they “may” have found it in this morning’s NFP report. The NFP, which measures job loss, came in at -20K. Expectations for this number were all over the place but the fact that there wasn’t job growth would normally be seen as negative. However, the ray of hope in this report is that the unemployment rate dropped to 9.7% for the month, down from 10%. Now I’m no mathematician, but it seems highly suspect to me that the unemployment rate can go down, even as we see continued job losses. But whatever, in early trading it looks the market is going to “take the ball and run with it” as futures have bounced off of their lows. It would not shock me to see the market wake up at some point and realize it didn’t get what it is looking for. Today may be a continuation of Thursday’s bloodbath.
Here’s how the currencies are doing this morning:
Aussie (AUD): The Aussie was up in early action this morning paring back some of yesterday’s losses, as the initial reaction to the NFP was positive, encouraging some risk-taking. Whether this can hold throughout the day is another story. With all of the fear and uncertainty out there, investors may flee to safety over the weekend. Contributing to Aussie strength was the RBA’s Quarterly Monetary Policy Statement that stated that “economic growth will continue to accelerate, even if the policymakers are forced to raise the benchmark interest rate by ¾ of a point.
Kiwi (NZD): The Kiwi is up this morning vs. the Dollar and Yen, as mild risk-taking is still the theme at this point in the morning. No major news out of New Zealand.
Loonie (CAD): It’s a good morning in Canada today, as the Canadian economy gained 43K jobs last month, reducing the unemployment rate to 8.3%. This makes the Canadian dollar this morning’s big winner, as it is also benefiting from mild risk-taking and the bounce in oil. It is up across the board this morning, most notably against the Japanese yen.
Euro (EUR): Yesterday was a tough day for the Euro, as the flight to safety trade sent the common currency to a 6-month low near 1.365 vs. the dollar. The Euro is also known as the “anti-dollar”, so it gets hit particularly hard when there is major risk aversion. Throw in the problems with the PIIGS countries, and it’s no wonder ECB President Trichet was out this morning trying to defend the Euro and instill confidence that the potential contagion from the Greek “tragedy” will not spread throughout the region. It looks like the Euro may re-test that low as it currently sits near that low.
Pound (GBP): The pound is down this morning against all but the yen on the risk aversion theme.
Dollar (USD): The dollar had a huge rally yesterday and is mixed this morning, down against the commodity currencies but up against the Euro, Pound, and Yen. We could continue to see some near-term dollar strength, as heightened sensitivity to risk is occurring around the globe and market trends are pointing in that direction.
Yen (JPY): The yen is also mixed this morning, following the same themes as the US dollar, though down against USD.
In world markets, the Asian stock market got clobbered and closed down.
European stock indices are currently down as are the US markets, although it looks like we may have a reversal here in the US as the media monkeys try to put as much lipstick as possible on that NFP pig!
Gold and oil are flat, waiting for stocks to decide which way they want to go. Commodities were down roughly 3% yesterday.
As you can see, there still is MAJOR fear out there as economic recovery is not taking place as quickly as anyone would like. What I really want to stress here is that on a day like yesterday, when nearly EVERYTHING was down, the only 2 places to park your money that went up were in the currency market. If you had bought dollars or yen yesterday, you were a happy camper while everyone else was crying in their coffee.
Isn’t it time you see what this market is all about?
To learn more about how you can make gains even when nearly EVERYTHING is going down, be sure to check out our affordable currency trading courses.
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Non-Farm Payrolls Disappoint!
By Mike Conlon | January 8, 2010
The US Non-Farm Payrolls Report (NFP) is usually one of the biggest market moving numbers in the currency markets. Today’s number is no exception. The report came in for December at -85K, a very disappointing figure. Estimates were expecting this number to be flat, that we neither gained or lost jobs for the month. Although I had seen some pretty wild numbers tossed around, anywhere from +/- 200K. The revisions for the prior two months showed a net loss of 1K jobs, a negligible but encouraging figure.
So what does this all mean? Well in a word: trouble.
The US economy is not adding jobs nearly as quickly as the government had hoped. With all of the enormous amounts of stimulus spending, we have little to show for it. As a result of this figure, the US dollar reversed course and immediately began to weaken. If anyone had any delusions about a US rate hike in the first quarter of the year, they can pretty much forget about it as its now off of the table. Unless the dollar tanks so badly that Bernanke HAS to do something.
My guess is that we’re going to be looking at Japan 2.0 here in the US, our own version of their “lost decade”.
Just to illustrate the volatility that can occur around this figure, take a look at this chart of EUR/USD: (click chart to enlarge)
Close to 100 pips in a few minutes!
This could make an interesting year for the US dollar. There are 2 basic ways that we will see dollar strength this year; either through interest rate hikes or risk aversion plays. So while this logic may be a bit counter-intuitive to some, it’s going to be very important to take our clues from the other markets to see which theme is playing out.
And of course don’t forget that the dollar can continue to weaken well into this year, the question is going to be that if things don’t get better on the employment front, at what point does that filter through to the other markets?
Only time will tell.
To learn more about how these government figures can affect your savings, be sure to check out our forex trading courses!
Tags: Bernanke, blog, cad, course, currenc, currency, currency market, dollar, economy, EUR, eurusd, forex, forex trading, forextrading, fx, fxedu, Il, interest, interest rate, Japan, Mike Conlon, minutes, nfp, payrolls, pip, pips, time, USD
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Markets become “weighed down” after today’s Employment report!
By Sean Hyman | July 2, 2009
Unemployment in the U.S. now stands at 9.5%. Job losses came in at -467,000 vs. -360k expected. Oil slumped to $67 down recently from $70-$73. The Dow is down 160 points. Most all foreign currencies that I see are down on the day as the defensive plays of the dollar and yen both thrive upon the dour NFP report. So any bright spots out there? Yes, the revision on last month’s NFP came in better than expected by a small margin. Also, the ECB kept rates unchanged rather than lowering rates in the Euro Zone. So those are basically the only two “rays of light” out there this morning so far.
Tags: currenc, currencies, dollar, dow, ECB, EUR, Euro, forex, FXEDU, Hyman, job losses, lower, mywealth, nfp, oil, rate, Sean, Sean Hyman, spot, U.S., unemployment, Yen
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ECB keeps rates at 1% (as expected). NFP & ECB Press Conference @ 8:30 am EST
By Sean Hyman | July 2, 2009
The ECB kept interest rates unchanged at 1% as expected. Now let’s see if Trichet provides anything revolutionary in his press conference at 8:30am EST. Also, the U.S. Non-Farm Payrolls will be coming out at the same time and the U.S. Unemployment rate. So lots to keep track of around 8:30 am EST today!
Tags: ECB, Hyman, interest, interest rate, interest rates, lot, NFP, payrolls, Sean, Sean Hyman, time, Trichet, U.S., unemployment
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What is the biggest “market moving event” of the month typically?
By Sean Hyman | June 5, 2009
NFP: Non-Farm Payrolls in the U.S.
This event draws traders like bugs to a light.
However, it’s not always the most prudent thing to trade, especially for newer traders. Why? The volume can be thin before and during the event and even up to about 30 minutes to an hour or so afterwards.
You see, the big banks usually stop making new trades in the marker WELL BEFORE the NFP announcement because they don’t want to put on their huge trades (usually a billion units or more, no lie) right before an “unknown” like this. The pros aren’t much on gambling on what they don’t know and can’t quantify.
No, they want to know what they are facing before placing trades. So since the “big boys” are out of the picture, so is a lot of the “huge” fx volume that we’re all so accustomed to most of the time.
Why the huge draw to NFP? Because, since the volume is thin and the numbers can routinely come out well off of expectations, it set up an environment for huge pip moves. Take a look at the last NFP for EUR/USD. This pair normally moves an average of 180 pips over 24 hours right now. However, upon the NFP announcement, it moved well over 215 pips.
If you dare to trade this event…be aware that you should trade FAR FEWER lots than you normally trade…and stops would have to be wide. Be comfortable with the potential dollar loss that could happen and make sure it is no more than 5% OR LESS of your account equity. Get a demo to trade, here: http://www.fxedu.com/practice-forex-account
Tags: account, bank, blog, demo, dollar, EUR, forex, forextrading, fx, fxedu, Hyman, lot, minutes, nfp, pair, payrolls, pip, pips, practice, Sean, Sean Hyman, time, trade, trader, trades, U.S., USD, volume
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Get Ready to Trade today’s NFP Numbers. Also, Canada ADDED Jobs!
By Sean Hyman | May 8, 2009
Don’t forget that Non-Farm Payrolls comes out this morning at 8:30am EST. Previously, the numbers came in at -663,000 and it’s expected to improve to -600,000 this time.
Unemployment, however, is expected to rise from 8.5% to 8.9% this time.
Also worthy of noting…Canada just ADDED jobs as their report came out this morning…and their unemployment held steady with no increase.
Only one other country has ADDED jobs recently and that’s Australia.
So chalk one up for the “Commodity Currencies”.
Remember, the retail speculator feels the “need” to be the first one into the NFP trade. However, the pro waits 30 minutes to an hour or so and actually reads the report. Then they place their trades once they make their assessment and the huge volumes return to the market by then.
This is when big reversals can occur to the original move and sometimes be even larger than the initial spike move. So keep that in mind.
Get your free demo here and get ready to trade today’s NFP report: http://www.fxedu.com/practice-forex-account
Sean Hyman
www.forextradingblog.com
Tags: account, blog, canada, commodity, currencies, demo, forex, forextrading, free, fx, fxedu, market, nfp, payrolls, practice, Sean Hyman, time, trade, trades, unemployment, volume
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One of those days for the Intra-day trader to stand aside. Here’s why…
By Sean Hyman | May 6, 2009
Today, the biggest gainer on the day is AUD/USD up only 0.80%. So the biggest gainer on the day isn’t even up a full percentage point.
The largest loser on the day is EUR/AUD which is down 1%. That’s nothing for that volatile pair. So while there is mild Aussie strength on the day, there is no “big momentum” on the day.
Intra-day traders need “momentum” aka “movement” because they have to be “right” and essentially “right now”!
Therefore, on “dull days”, it’s best to stand aside. You will generally find that you preserve profits gained from previous days when you do this.
Note: Since the U.S. Dollar Index recently broke its uptrend, look for the EUR/USD and AUD/USD to have sizable upside days in the near future, relative to its “down days” overall.
The euro is the biggest component (over 57%) in the U.S. Dollar index, so it stands a huge chance at being a huge beneficiary. Also, the euro is the next most liquid currency outside of the dollar. Therefore, it’s the next logical place to go and why it gets the nickname of “the anti-dollar”.
The Aussie dollar has a huge advantage too because its fundamental data has held up much better than other countries…and it also has the highest interest rate out there…of any industrialized nation. Therefore, that gives it a huge “leg up” going forward too.
So once the momentum does come back (probably after tomorrow’s interest rate decision on the euro and pound), you will want to look to these two currency pairs to see how they are faring.
Also, remember that NFP (Non-Farm Payroll) report, comes out on Friday. Get started with a demo account today: http://www.fxedu.com/practice-forex-account
www.forextradingblog.com
Tags: AUD, Aussie, blog, currency, currency pairs, dollar, dow, EUR, Euro, forex, forextrading, fundamental, index, interest, interest rate, momentum, movement, nfp, pair, pound, Sean Hyman, ssi, trade, trader, trend, U.S., uptrend, USD
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Non-Farm Payrolls came out!
By Sean Hyman | April 3, 2009
Estimate was for a loss of 660,000 jobs and for unemployment to come in at 8.5%. Came in -663k, 8.5% …so basically inline. GBP/USD and EUR/USD moving up on the news….however, still NZD/JPY and NZD/USD up the most % wise on the day, thus far.
Sean Hyman
Tags: dollar, EUR, EUR-USD, euro, gbp, GBP-USD, job losses, jpy, NFP, nzd, Sean Hyman, unemployment, USD
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