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http://track.com/articles/the-morning-track-still-matters/
The US jobs day madness is about to begin. Many will see this a trading waste of time and wait for another Trump Tweet or executive order before changing positions. The gnawing truth is that economic data remains important and that politics doesn’t control everything. The lesson from overnight – central banks still matter. The BOJ capped 10Y yields and sent USD/JPY higher – turning risk-off gloom into risk-on with a mere $4.6bn. This was in contrast to the PBOC which raised its money-market SLF rates 10bps upon their return from holiday. The data also matters today and the whispers for jobs are all over 200,000 today after the ADP with the stale consensus call 175,000. The more important data might be in the average hourly earnings as we all want the right kind of inflation. The markets also reacted already to the PMI Service reports with UK missing and the GBP reeling accordingly. SEK also lost on big miss for its industrial production. We go into the US jobs re
port, like we went into the FOMC meeting with a market slightly long dollars. The JPY started the USD rally overnight and that extending with ECB’s Praet saying the “firming recovery†in euro area “is not yet sufficiently robust to ensure a self- sustained convergence of inflation rates to levels closer to 2 percent.†That left EU bonds bid and the spread to US wider – driving USD again. But the bigger story isn’t about the USD crawling back but carry trades holding – bond curves are steeper with view that Central bankers want to be late to the inflation party, EM FX is holding big gains – consider TRY the bad child of January up 3.1% on the week and gold holds over $1210 despite USD and rates. The world is going to be focused on NFP and the lottery of the number then it will want to test the USD trend with EUR back in play as 1.0820 has become the new top resistance with 1.0680 looking dangerous.
The Morning Track still-matters
- The Morning Track - Still Matters by Bob Savagehttp://track.com/articles/the-morning-track-still-matters/
The US jobs day madness is about to begin. Many will see this a trading waste of time and wait for another Trump Tweet or executive order before changing positions. The gnawing truth is that economic data remains important and that politics doesn’t control everything. The lesson from overnight – central banks still matter. The BOJ capped 10Y yields and sent USD/JPY higher – turning risk-off gloom into risk-on with a mere $4.6bn. This was in contrast to the PBOC which raised its money-market SLF rates 10bps upon their return from holiday. The data also matters today and the whispers for jobs are all over 200,000 today after the ADP with the stale consensus call 175,000. The more important data might be in the average hourly earnings as we all want the right kind of inflation. The markets also reacted already to the PMI Service reports with UK missing and the GBP reeling accordingly. SEK also lost on big miss for its industrial production. We go into the US jobs re
port, like we went into the FOMC meeting with a market slightly long dollars. The JPY started the USD rally overnight and that extending with ECB’s Praet saying the “firming recovery†in euro area “is not yet sufficiently robust to ensure a self- sustained convergence of inflation rates to levels closer to 2 percent.†That left EU bonds bid and the spread to US wider – driving USD again. But the bigger story isn’t about the USD crawling back but carry trades holding – bond curves are steeper with view that Central bankers want to be late to the inflation party, EM FX is holding big gains – consider TRY the bad child of January up 3.1% on the week and gold holds over $1210 despite USD and rates. The world is going to be focused on NFP and the lottery of the number then it will want to test the USD trend with EUR back in play as 1.0820 has become the new top resistance with 1.0680 looking dangerous.
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Robert Savage
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