IIFT Daily Note with Peter Brown

Non Farm Payrolls to add to volatility.

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The markets are nervous enough, but today we are set to add to that with the latest release of NFP. This market is out of control and the moves in both indices and foreign exchange are crazy. We have come from a simple market where stocks were rising and the dollar easing, based on the assumption that QE was working and the US economy improving. Suddenly in a matter of weeks all confidence in that view has been destroyed. Now we think QE is not working and we are thrashing the dollar. Put together with the mad experiment ongoing in Japan and we explain why the markets are putting in the daily violent moves.

Nobody can predict these market moves from one day to the next. Staying away from the market is one strategy or limiting your downside to say 75 points in another. If you have a good day it is possible to make 200+ points.

So to the NFP. With the market in this mood it takes on increased significance. Expected is 170K  all the risk is for a lower number based on recent stats.

Above 190K we should rally and below 150K we should fall. If we get a wild miss e.g. >225 or < 125  it will get very hairy. Expect the market to whip saw up and down as we work out the effect the figure will have on future QE.

Technical analysis will likely have little effect but the levels are 1638  1600   on the wide.

Dollar is still getting hammered against the JPY and the Eur.  1.3300 may be a short term top and 95.00 on USD/JPY

Be careful allow 75 points max downside today.

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