Non- Farm Friday Funnies... Here we go again folks

Welcome to the NFP Friday funnies.

That day is upon us once more and your scribe has woken this morning with a gut feeling and a mild hangover (thanks to the discovery of a supply of my favourite ale at a fantastic pub not far from my abode). Fortunately for me though, the former is in no way related to the latter and this morning presents me with a real eye opener as to how I think this market plays out ahead of the Olympics and inevitable Summer lull.

Essentially what I’m looking for in the very near future (most likely early next week, if not even this afternoon post NFP print) is for USD and, obviously, DXY capitulation.

A brief background to my logic, as those that have been reading me for a while now know, I am of the mind that we are in the midst of heavily manipulated markets with the world’s 2 largest central banks in a not so tacit race to devalue their respective currencies. As a result we are left with nothing more than heavily defined and defended ranges in the USD complex (both top and bottom). Thus the logic (hungover or otherwise) behind my gut feeling is that with the DXY having put in a more than solid performance across the board, it is now time to give back some of those recent gains. Long story short, I’m looking for USD sales to kick in across the market within the next short while. This means another definition of the 1.3000 lower boundary in EURUSD, 1.0250 (or thereabouts) to hold in AUDUSD, Cable to respect and defend the 1.6130 line in the sand etc.

Basically I’m not looking for a fundamental reason to support this view, as none exists, and quite frankly the market has proven it doesn’t need such distraction as validation for its erratic movements. It’s simply the ebb and flow, the swings and roundabouts if you will, of the current market. So, does this mean that the NFP print will be the catalyst? Possibly, but honestly probably not. As I said, this is more likely to develop early into the new week. The only real suggestion of how to play this is, is via the options market, with vols trading so softly and certainly markets looking for further USD strength, buying USD downside options should prove to be extremely cheap and a better deal than watching a 20/30 point stop on a spot position that eventually gets eaten by some front running gimp, only to revert...

Ok, now that you know where I stand, I shall descend from upon my soapbox and attend to matters at hand (bacon and cheese toastie...).

Overnight, the RBA gave us what we all knew was coming anyway, softer and lowered growth, GDP and inflation forecasts (hence the 50bps cut, nowhere near all of which has so far been passed on by domestic AUD banks to the retail base), and the little battler absorbed all this well, as the sell off (for the most part has already occurred) on the back of the rate move took all the steam out of the downside for now.

Little elsewhere as most await the print this afternoon.

This morning’s PMI’s out of the Eurozone have only confirmed once more what we already knew, which is, it ain’t all croissants, tapas and happy happy joy joy out there at the moment. Still the EURUSD does little...

And finally the NFP... Yeah, I think it’s going to be a rubbish number, yeah I think the actual rate of unemployment is likely to increase from last month, and yes this will most likely lead to USD buying in the mad 15/20 minute scramble post release. Call it, risk off, or for that matter call it your Aunty Jan’s French toast, ultimately it doesn’t matter what you label it, it’s simply how I see it...

Before I depart into my post Cooper’s Pale Ale helmet protected afterglow, just a quick mention of a former colleague and close personal friend of mine, who has seemingly taken my helmet wisdom well and truly to heart and with new haircut in tow is now emulating scene’s from one of my favourite Kubrick movies “Full Metal Jacket”. To you, HOP, I say, maintain the rage!

Folks apparently there is a long weekend here in the UK and having only recently found this out, I look forward to making the absolute most of it. So with this I bid you all a good weekend and suggest (HOP take note) helmets ever at the ready!