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US Session: US Unemployment Rises To 10.2%, But Drop In Risk Appetite Should Be Temporary
November 06, 2009 6:11 PM CET
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G10 Advancers and Decliners vs USD |
| | JPY | 0.99 |  | | | AUD | 0.76 | | | | NZD | 0.43 | | | | GBP | 0.06 | |  | CHF | -0.18 | | | DKK | -0.20 | | | EUR | -0.22 | | | SEK | -0.28 | | | NOK | -0.34 | | | CAD | -0.69 | |
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Global Indexes |
Current Level |
% Change |
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| FTSE 100 Index | 5'142.72 | + 0.33 | | DAX Index | 5'488.25 | + 0.13 | | SMI Index | 6'293.61 | + 0.13 | | S&P 500 Index | 1'066.61 | 0.00 | | DJIA Index | 10'009.21 | + 0.03 | | Nikkei 225 Futures | 9'760.00 | - 0.20 | | Hang Seng Futures | 21'846.00 | + 1.94 |
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World Markets |
Current Level |
% Change |
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| Gold | 1'095.18 | + 0.45 | | Silver | 17.36 | - 0.29 | | VIX | 24.55 | - 3.46 | | Crude wti | 77.10 | - 3.17 | | USD Index | 75.76 | + 0.02 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| Mon 9th Nov | - | - | - | | ANZ Job Advertisements, % m/m Oct | --- | 4.4 | AUD/00:30 | | Home Loans, % m/m Sep | 3.0 | -0.6 | AUD/00:30 | | German Trade Balance, EUR bn Sep | 11.8 | 8.1 | EUR/07:00 | | Sentix Investor Confidence, index Nov | --- | -12.6 | EUR/09:30 | | German Industrial Production, % m/m Sep | 1.7 | 1.7 | EUR/11:00 | | Housing Starts, thous Oct | 156.8 | 149.3 | CAD/13:15 |
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Currency Tech |
EURUSD
R 2: 1.4967
R 1: 1.4920
CURRENT: 1.4840
S 1: 1.4810
S 2: 1.4700
GBPUSD
R 2: 1.6700
R 1: 1.6636
CURRENT: 1.6580
S 1: 1.6405
S 2: 1.6240
USDJPY
R 2: 91.60
R 1: 91.30
CURRENT: 89.90
S 1: 89.60
S 2: 89.20
AUDUSD
R 2: 0.9277
R 1: 0.9220
CURRENT: 0.9165
S 1: 0.9025
S 2: 0.8905
USDCAD
R 2: 1.0960
R 1: 1.0870
CURRENT: 1.0720
S 1: 1.0598
S 2: 1.0505
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Market Brief |
FX markets have oscillated briskly since the US employment data this afternoon, as the Unemployment Rate posted a shock 10.2% against estimates for 9.9% (from last month’s 9.8%). The Change in Non-Farm Payrolls themselves were also worse than expected at -190k (vs. -175k consensus), but the figure was sweetened somewhat by last month’s upward revisions to -219k from -263k.
We expected worse employment data to be good news for risk assets (as it ensures the Fed’s continued accommodative stance), however the severity of the deterioration in Unemployment initially sparked a knee-jerk flight to safety with EURUSD spiking down to test support at 1.4814, while USDJPY plunged below 90.00 (and on to touch 89.62 lows). The rapid rally in the USD against the majors was short-lived as investors recovered from the scare of the headline unemployment figure, and resumed buying back risk assets in earnest on the view that the Fed won’t be pulling the cushion of low rates and cheap liquidity any time soon (as our original logic had predicted). EURUSD ramped up 100pips from the lows to touch 1.4914, but failed to break higher and has since paired back to 1.4850. The rapid recovery in risk appetite sent gold rocketing to new all-time highs at $1101.15, but that too has since pared back some gains to settle at $1092. We still assert that the risk-rally remains the prevailing theme in the market, and expect EURUSD to resume its bullish trend despite the knock to confidence post-NFP. For the rest of today however, it seems we are in for more choppy, range-bound price action as the key support at 1.4810 has held in well, and attempts to breach 1.4910-20 resistance zone have so far been in vain.
Earlier events in the session included UK PPI data which painted a gloomy picture for the UK manufacturers; input prices surged 2.6% in Oct (vs. 1.5% expected), but output prices missed forecasts with just a 0.2% gain (vs. 0.3% expected). As the rest of the world seems on the road to recovery, pushing up commodity prices , weak domestic demand in the UK is limiting the scope for these costs to be passed on to the consumer. This makes for an uncomfortable reality and pressure on margins may well lead to further job-losses in the UK in a bid to cut costs. GBPUSD was surprisingly resilient in the face of the data, and found decent support just below 1.6600; since the NFP release however, price action has been predominantly driven by USD moves.
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European Session: Waiting on NFP
November 06, 2009 10:38 AM CET
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G10 Advancers and Decliners vs USD |
| | NZD | 0.97 | | | | AUD | 0.89 | | | | SEK | 0.46 | | | | NOK | 0.40 | | | | GBP | 0.25 | | | | EUR | 0.22 | | | | CAD | 0.20 | | | | CHF | 0.19 | | | | DKK | 0.17 | | | | JPY | 0.03 | |
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Global Indexes |
Current Level |
% Change |
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| Nikkei 225 Index | 9,789.35 | + 0.74 | | Hang Seng Index | 21,829.72 | + 1.63 | | Shanghai Index | 3,164.04 | + 0.28 | | FTSE 100 Index | 5,133.55 | + 0.15 | | DAX Index | 5,491.81 | + 0.19 | | SMI Index | 5,491.81 | + 0.19 | | S&P future | 6,300.22 | + 0.23 |
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World Markets |
Current Level |
% Change |
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| Gold | 1,094.40 | + 0.37 | | Silver | 17.56 | + 0.89 | | VIX | 25.43 | - 8.26 | | Crude wti | 80.32 | + 0.87 | | USD Index | 75.60 | - 0.18 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| Producer input prices, % m/m (y/y) Oct | -0.5(-6.5) | 1.5 (-1.5) | GBP/09:30 | | Producer output prices, % m/m (y/y) Oct | 0.5 (0.4) | 0.4 (1.9) | GBP/09:30 | | Germany: New manufacturing orders, % m/m Sep | 1.0 | 1.4 | EUR/11:00 | | Change in non-farm payrolls, thous Oct | -175 | -263 | USD/13:30 | | Unemployment rate, % Oct | 9.9 | 9.8 | USD/13:30 |
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Currency Tech |
AUDUSD
R 2: 0.9220
R 1: 0.9180
CURRENT: 0.9165
S 1: 0.8970
S 2: 0.8905
USDCAD
R 2: 1.0960
R 1: 1.0870
CURRENT: 1.0620
S 1: 1.0598
S 2: 1.0505
EURJPY
R 2: 135.75
R 1: 135.00
CURRENT: 134.80
S 1: 132.50
S 2: 131.70
USDMXN
R 2: 13.455
R 1: 13.405
CURRENT: 13.275
S 1: 13.205
S 2: 13.175
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Market Brief |
The USD weakened versus most of the majors with the exception of the JPY as US equities closed up nearly 2% and Asia markets are also much higher across the board. Positive economic data and optimistic central bank commentary helped spur risk-seeking as EURUSD traded 1.4812-1.4919 and USDJPY 90.88-89.99. Oil is now above $80 and gold remains bid at $1095.
Yesterday, the Bank of England held rates unchanged as expected, but the announced increase in QE of GBP25bln was below the market's target for GBP50bln. This triggered a sharp rally in GBPUSD from 1.6500 to 1.6600 as the additional assets will be purchased over a 3 month period, implying a slower pace of asset purchases. The ECB decision and press conference followed shortly afterwards but produced few surprises. ECB President Trichet's comments that not all liquidity measures currently in place would be needed as much as in the past gave a boost to EURUSD, but questions on the strength of EURUSD merely prompted a reiteration of the line that a strong dollar is in the interest of the US – albeit with an additional mention that orderly rises in Asian currencies, particularly China's, would be welcome.
In Australia the November Statement of Monetary Policy revealed upgrades in the RBA's inflation and growth assumptions; the magnitude of the upgrades was large compared to its August forecast and even more extreme compared to its May forecasts. AUDUSD has been well supported this morning up to highs of 0.9176. The next RBA move remains largely data-dependent following the weaker retail sales figure. While it is still a close call, forecasts are largely calling for a 25bp rise in December.
Today’s highlight will be the release of US labour data. Consensus is looking for a -175k change in October, meaning last month’s -263k decline was just a blip in the improving trend. That said, a rebound in the labour force after September’s sharp fall may mean that the unemployment rate rises from 9.8% in September and hits 10.0% for the first time since June 1983. A check of dollar responses to the non-farm payrolls data over the past eight months suggests that upside surprises in the employment data have been good news for the USD vs. the JPY and EUR whereby upside surprises have tended to lead to a higher USDJPY and weaker EURUSD. Historically the best way of playing a surprise NFP is through USDJPY. We could see choppier trading into year-end as a result of investors looking to book profits, which would be dollar-supportive.
Today highlight will be the release of US labour market data. Calculations suggest that non-farm payroll employment fell by around 180,000 in October. That would mean the acceleration in the rate at which payrolls fell in September, to a 264,000 decline, was just a blip in the improving trend. That said, a rebound in the labour force after September’s sharp fall may mean that the unemployment rate rises from 9.8% in September and hits 10.0% for the first time since June 1983. A check of dollar responses to the non-farm payrolls data over the past eight months suggests that upside surprises in the employment data have been good news for the USD vs the JPY and EUR whereby upside surprises have tended to lead to a higher USDJPY and weaker EURUSD. Historically the best way of playing a surpise NFP is through USDJPY.
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ACM Advanced Currency Markets SA (hereinafter referred as ACM) is a professional financial intermediary, directly regulated by the Swiss Federal Department of Finance, Anti Money Laundering Control Authority. As forex specialist, ACM provides only currency trading via highly professional forex trading software. All customers are aware that this information or any part thereof has been prepared without taking account of your objectives, financial situation and/or needs. This information is not intended as personalized investment advice and does not constitute a recommendation. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. The analysis is based on the information which ACM finds reliable and accurate, but ACM does not assume any responsibility for any material nor for the transactions made on the basis of the information or the estimates of the analysis. ACM cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct, indirect and/or consequential loss arising from any use of this information, document or its content. All opinions and estimates constitute ACM analysis as of the data and are subject to change without notice. ACM does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions. Past performance is not a reliable indicator of future performance.
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