As the US jobs report beat expectations in the way of NFP with 175K, here is a look at these rare charts patterns in USDJPY, 10-year yields and AUDCAD. Full charts & analysis
Here is the link to the recording of my pre-NFP webinar last night with Fari Hamzei and George Cavaligos. I gave the rationale to my trades including longs EURUSD, AUDUSD and AUDNZD. 1 of EURUSD longs hit its final target at 1.3900 (entry at 1.3750). My recording gets cut off 40 mins down the session before I return to the webinar once George concluded his session. Full link here
A healthy dose of volatility gripped markets as Draghi boosted the euro and yen crosses slumped. The Australian dollar was the top performer while the yen lagged. RBA Governor Stevens tried to jawbone down AUD in early Asia-Pacific trading to no avail.
The moves on Thursday in the FX market were as large as any day this year. The action started with the best jobless claims data since November as the 323K beat expectations of 336K. The numbers boosted USD/JPY by 40 pips and above 103.00 for the first time since January.
It also highlights the divergence we've highlighted in economic data. On soft releases, namely the ADP and ISM data this week, USD/JPY was reluctant to fall. Now with an upbeat number, the pair surged.
Strength in the yen crosses was aided by a major move higher in EUR/JPY on Draghi's comments. Or more accurately, his lack of comments. The market was looking for a hint at further action but the ECB President said upside and downside risks to inflation are limited and broadly balanced over the medium term. EUR/JPY jumped 230 pips to 142.90 and EUR/USD closed at the highest level in more than 2 years.
Other yen crosses took out the recent highs as well and NZD/JPY was particularly noteworthy, hitting the highest since 2007.
If the market can hold these levels through non-farm payrolls, this could be the start of some extended trends.
The Asian schedule is typically light as the week winds down. The focus will be AUD/USD after it rose above the Jan/Fed double top to form a bullish inverted head and shoulders pattern.
RBA Governor Stevens is speaking in parliament but the early lesson is that if we've heard it before, it's not good jawboning and that was the case early in Steven's 3 hour appearance as he repeated the same concerns about a high AUD to no avail. Stevens also forecast a period of stability on interest rates but warned that inflation is not rising as fast as the data would suggest.
|Nonfarm Payrolls (FEB)|
|150K||113K||Mar 07 13:30|
|Eurozone ECB Interest Rate Decision (MAR 6)|
|0.25%||0.25%||0.25%||Mar 06 12:45|
|Challenger Job Cuts (FEB) (y/y)|
|41.835K||45.107K||Mar 06 12:30|
|Continuing Jobless Claims|
|2,907K||2,973K||2,915K||Mar 06 13:30|
|Initial Jobless Claims|
|323K||338K||349K||Mar 06 13:30|
|Jobless Claims 4-Week Avg.|
|337K||339K||Mar 06 13:30|
Ashraf's Webinar with Fari Hamzei And George Cavaligos starts at 16:00 ET, 21:00 GMT. Registration link Covering Friday's release of the US and Canada jobs report, Ashraf will go through the existing trading calls in EURUSD, AUDUSD, AUDNZD, AUDCAD and USDJPY and shedding light on the latest in USDCAD. Today's calls include 2 trades on AUDUSD and AUDNZD with 3 relevant charts.
The US dollar shrugged off weak ADP and ISM data in an impressive showing. The Canadian dollar was the top performer after the BOC decision while the yen lagged.
The US dollar had to contend with some weak figures and its resilience was impressive. ADP employment rose 139K compared to 160K expected and the previous reported was revised down by nearly 50K. The ISM non-manufacturing report slid to 51.6 compared to 53.5 with employment tumbling to 47.5 from 56.4.
The US dollar hardly budged despite the numbers and that reflects a few factors:
- The market is convinced the Fed's taper is on autopilot
- Traders want to wait-and-see NFP before drawing conclusions
It's impossible to get away from discussions about Mother Nature and the economy and the Beige Book mentioned weather 119 times.
The Bank of Canada decision gave the loonie a half-cent lift and CAD/JPY, in particular, is showing signs of a turnaround. Despite the currency optimism the BOC didn't paint a rosy picture. They essentially reiterated the outlook from January despite some upbeat numbers and officials will continue to watch the data.
The focus will stay on Canada and the US in Asian trading with the Fed's Fisher (0000 GMT) and Williams (0130 GMT) scheduled to speak. BOC #2 Macklem is sandwiched in at 0115 GMT. In China, the National People's Congress continues until March 13 and today, the finance minister is speaking at 0100 GMT.
|ADP Employment Change|
|139K||160K||127K||Mar 05 13:15|
|Retail Sales (JAN) (m/m)|
|0.5%||0.5%||Mar 06 0:30|
|ISM Non-Manufacturing Employment|
|47.5||56.4||Mar 05 15:00|
|ISM Non-Manufacturing New Orders|
|51.3||50.9||Mar 05 15:00|
|ISM Non-Manufacturing Prices|
|53.7||57.1||Mar 05 15:00|