This morning, the always-sure-to-generate-volatility Non-Farm Payrolls came in at a “shocking” -11,000, vs. analyst expectations of -130,000. This comes on the heels of the Obama jobs summit, and certainly is good news for the economy.
If you believe it. And I’m not sure that the market does.
Let’s take a look at a chart of AUD/USD to see what I mean: (click chart to enlarge)
The reason we are looking at this chart is because the AUD/USD pair typifies the risk trade. When things in the economy are seemingly good, risk appetite increases and investors seek out higher yield. And that looks like what happened right out of the gate this morning when the number was announced.
But then, the pair proceeded to sell off. There are 2 reasons I can think of for this happening:
1. The market perceives that the economy is improving more rapidly than expected and therefore Bernanke and the Fed are going to be able to raise rates MUCH sooner than expected.
2. No one believes the numbers are real. This brings a heightened sense of fear to the markets. Not to mention that the BLS (Bureau of Labor Statistics) revised their figure way down from last month. (190K to 111K)
Right now USD is up against AUD, NZD, EUR. The anomalies today are JPY and CAD. The former I have spoken about at length about why the Japanese are trying to weaken the yen. CAD is experiencing strength due to its status as a “commodity currency’ and is benefiting from rising gold prices. In addition and more importantly, the Canadian economy actually added jobs vs. a loss last month. Good news for CAD.
Does that mean that this we’re going to stay this way all day?
Check back later to find out!!!
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