Payrolls Disappoint - Will USD/JPY Break 85.00?

ppteam

US Non Farm Payrolls report missed expectation printing at -131K versus -65K eyed. The private payroll number increased by 71K versus 90K forecast while government sector lost more than -200K jobs. The one bright spot in the NFP report was the increase in manufacturing jobs which rose 36K from 13K projected.   The unemployment rate ticked down to 9.5% but it was the result of workers dropping out of the labor force rather than any uptick in demand. The average hourly earnings also improved modestly to 0.2% from 0.1% expected while hours worked increased to 34.2 from 34.1

Overall, although a disappointment, the report was not a total disaster indicating that labor demand at least in the private sector remains lackluster but nevertheless positive. The clear takeaway from the employment report however is that the public sector   will be a drag on the labor markets and on the US economy as a whole, as cash strapped state and municipalities continue to reduce headcount into the second half of the year. Meanwhile, the pick up in the private sector demand is anemic and unable to offset the losses from the government layoffs.

After a mild pause as risk FX battled between the two competing impulses of risk aversion versus capital flight from dollar denominated assets, the later force won out and the euro, cable and Aussie all climbed higher. EUR/USD broke to a fresh weekly high of 1.3270 and 1.3300 now comes into view as the anti-dollar flows continue. Meanwhile, unsurprisingly, USD/JPY, tumbled in response to the weak payroll news as US yields dropped to fresh lows. Some analysts now anticipate that the 10 year bond will go to 2.5% if the Fed initiates a fresh round of QE, but given today’s data it is not yet clear if the Fed will be act now or if it will decide to remain stationary for another month in the hopes that labor demand will pick in the private sector as cash rich corporations slowly increase headcount. In either case the payroll number today was clearly bearish for USD/JPY and as we go to print the pair is approaching the key 85.00 barrier. That level which is purported to contain large stops and may therefore be defended heavily, but is nevertheless likely to fall if not today then early next week as currency traders price in declining yields in the US bond market.

6th-Sense

US Non Farm Payrolls report missed expectation printing at -131K versus -65K eyed. The private payro ...
ppteam 发表于 2010-8-7 17:24

    mkt down

ppteam

2 fx 'analysts' called UJ break down, this makes me feel suspicious.
when was lat time 2 analysts were right?

ppteam

all right, let's put this way. If UJ does break down, they are lucky; otherwise that's expected.
eitherway they still suck.

开小差

回复 1# ppteam


    ppt 老大，很多人说usd/jpy is very senstive to Bond, 可以展展说说why? 谢。

ppteam

回复 5# 开小差

I am not sure.
Those correlations only work when they work.

ppteam

btw, unlike most analysts think, the NFP was not that bad, the negative surprise was <= -140k

开小差

回复 6# ppteam


    thx, lol