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April 3, 2015

Dionne Warwick sings the Good Friday Payroll Blues

Filed under: Forex Strategies — Tags: , , , , , , — admin @ 4:43 pm

February 6, 2015

A payroll shocker?

Filed under: Forex Strategies — Tags: , — admin @ 4:43 pm

Another month, another payroll figure.   Although the Fed is not currently in play they conceivably could be in a few months, thus setting up every employment figure as an important one.  It’s not quite at the level of the burden being on the data to dissuade the FOMC from pulling the trigger, but once “patient” leaves the statement, it probably will be.

This time around, it seems as if the market is collectively taking the “under” on the published consensus of 230k.   This is not without reason.   The employment readings from a number of business surveys fell sharply in January; this, in conjunction with the recent decline in earnings expectations, has some in the market contemplating a growth scare.  Macro Man’s own model is forecasting a paltry 130k gain for private payrolls.

On the other hand, ancillary measures are not universally poor.   The jobs hard to get reading of the consumer confidence survey fell nicely, while the hiring intentions of small businesses reached a new cyclical high.  And the ADP, for all its warts, registered a still-decent reading over 200k.

For choice, Macro Man would take the “under” on the consensus but the “over” on his model.  So, too, would a vast cohort of other market participants.   One might argue that, this week’s weakness notwithstanding, there is  lot of bad news baked into the fixed income cake.  Your author wouldn’t disagree.  As such, he would be loathe to react much of a run-of-the-mill miss of 30-50k on the headline- and Katy bar the door if it’s a legitimately strong figure!

Sadly, Macro Man will only be able to watch the morning action.  Tomorrow afternoon, he’ll attend a service commemorating a friend and colleague who tragically passed away last weekend, only a few days after we’d last communicated.  You’d be hard pressed to find a more genuine guy, a true gentleman an industry where such chaps can sometimes be hard to find.

Rest in peace KK.

October 7, 2014

Payroll number? What payroll number?

Filed under: Forex Strategies — Tags: , — admin @ 4:42 pm

It’s interesting to see that since the release of the strong figure on Friday, EDZ5 has retraced all of its price action….

….as has USD/JPY.

Spooz, of course, have only given back a portion of their gains, because well….SPOOZ!

Most interestingly, high yield has barely given back any of its gains at all.

That, ladies and gents, is what a positioning wash-out looks like- when the “best” trades perform the worst.  Perhaps one might one to consult the Field Guide to Birds of the West Indies to see if there are any more dodgy pink flamingos lurking…..

March 31, 2010

Synthetic Payroll Day

Filed under: Forex Strategies — Tags: , — admin @ 4:44 pm

Welcome to payroll day! OK, it’s not literally payroll day, but given that a) we get ADP today, and b) markets are actually open on the day, punters might do well to treat this afternoon as a “synthetic” payroll day. After all, the ADP will presumably contain the “meat” of the payroll report anyways, which is private sector hiring; markets are surely clever enough to look through the Census hiring as temporary, right? Right?
While there has been much rumbling about the strength of Friday’s payroll figure much of it will, after all, be that temporary government hiring. After all the ink spilled and bonds sold in anticipation of Friday’s figure, Macro Man cannot help but wonder if it’s now firmly in the price. A weak-ish ADP would be a useful test of that thesis.

Macro Man was also intrigued to see the leak in Caijing (sadly, he cannot find a link, but the story is alluded to here) that China will move back towards a managed crawl next month. Now, regular readers will know that your author has long supposed that the current hard peg would remain intact through H1, but given the brewing storm of protectionism in Congress, might the Chinese decide that discretion is the better part of valour and allow the RMB to jiggle before they are named (if not shamed) in the Treasury manipulators’ report?

And if they do, would that not cause a) more hot money flows into China, and thus more reserve growth, and b) something of an entente between China and the US? If so, perhaps China might re-emerge as a buyer at Treasury auctions, which could come in handy at next week’s 3, 10, and 30 year efforts.

Moreover USD/JPY, an asset price closely linked to US yields, has reached what might be presumed to be a local top. Not only has it bounced off the early-January high on this, the first day of the new fiscal year, but the seasonality turns bearish for much of April into early May.
While there’s clearly no guarantee that any link between US yields and USD/JPY will be maintained at current levels/rations/whatever, it still gives Macro Man pause for thought. The US flattener, which was flavour of the month a couple of weeks ago, has retraced 61.8% of its move from late Feb to last week.

Call Macro Man crazy, but he finds himself sorely tempted to flirt with a bit of long duration or perhaps the flattener on synthetic payroll day…

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