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Article / 05 June 2015 at 11:07 GMT

FX Noon: It's plain wrong to expect a benign NFP

Director / Accumen Management
United Kingdom
  • Greek drama continues its agonising trek to conclusion
  • Expectations lean towards benign NFP – but they're wrong
  • It's gonna be an action-packed afternoon
at work
Get me to the office on time. Americans are working and today's NFP will prove it. Pic: iStock 

By Ken Veksler

A slight change of tack from the usual piece today, but after all, it's Friday.... 

The Greek drama continues to unfold, slowly and painfully, with chatter (basically confirmed now) that the latest tranche of cash due to the IMF today will be "bundled" with other payments and floated later this month. The market’s reaction has been anaemic at best as we await the NFP this afternoon (more on that in a minute).

The massacred price action in bunds has somewhat abated this morning, but I dare say there is certainly more to follow.

Looking for rhyme and/or reason for the move is pointless and perhaps best left to those pundits who don’t actually need to trade these markets or manage any consequent profit and loss. But as sure as the sun rises it also sets and if bunds start to get another wiggle on, EURUSD will be taken along for the ride as will the DAX, albeit in different directions.

On the topic of the NFP lottery, as I mentioned in recent days, I’m personally looking for a large outside print somewhere in the vicinity of +239,000 on the headline with probably around another +75,000 to the good in terms of revisions. The logic is fairly simple in that all the weekly claims data we’ve seen in recent months has pointed to continued on-trend employment improvement. 

The last couple of subdued NFP prints we’ve seen don’t in fact tell the whole story and are more likely to be statistical outliers than true representations of the underlying environment. Thus, look for some giveback today and ensuing mayhem as most people will likely be positioned for a benign and/or underwhelming print.

I must admit that while I want to be long of USD into this afternoon, I’ve only got a small Cable short in place and nothing else. The EURUSD has slipped to quickly (for me) from its peak yesterday and I certainly don’t intend on chasing it here ahead of the NFP. The USDCAD is setting itself up as the only other candidate I’d consider for a long USD play but with CAD data out also, I’ll likely wait for the respective prints and take it from there.

As always, helmets on and good luck out there today.

– Edited by Clare MacCarthy

Ken Veksler is director of Accumen Management

4y
buelte buelte
as always, enjoyable and useable - great stuff

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