All eyes are on this morning’s Non-Farm Payrolls report as this is one of the most important economic indicators and will show whether or not the employment picture is improving here in the US. It is no secret that the jobs picture has been bleak and with official unemployment rates still at 9.6%, less people are contributing to the tax pool which is helping contribute to unsustainable deficits here in the US.
The unemployment picture here in the US should have been the first thing the government tackled, rather than ramming through policies like regulation and Obamacare which have been deemed anti-business. The expectation for today is that the change in NFP will be a gain of 145K and the unemployment rate is expected to stay steady at 9.6%.
Meanwhile in Canada, the unemployment rate unexpectedly declined from 7.9% to 7.6%, though it looks like the participation rate fell as well so this number could be misleading as the net change in jobs added grew less than expected.
In the Euro zone, ECB bond-buying to calm markets has helped push the Euro higher, as has Euro zone retail sales and PMI figures which came in better than expected. In addition, the German Central Bank has forecast increased growth for next year.
This has induced a bit of risk-taking before the number.
**Edit** Wow—major disappointment with the NFP number. Jobs created were only 39K, which was off by more than 100K, and the unemployment rate ticked up higher to 9.8%. Major market reversal just took place.
In the forex market:
Aussie (AUD): The Aussie has been buoyed higher as the pitiful NFP number has induced major Dollar weakness as money flees the greenback at a break-neck pace.
Kiwi (NZD): The Kiwi is also higher for the same reasons as the Aussie.
Loonie (CAD): The Loonie is weaker across the board as a misleading headline unemployment rate figure came in lower even though only 15.2K jobs were created vs. an expectation of 19.8K. This is the likely result of the participation rate falling. (Click chart to enlarge)
Euro (EUR): The Euro is also higher, especially after the NFP report, as ECB bond buying has lowered bond yields (for now) and the economic outlook in Germany has improved. Money flows are re-setting as the debt crisis subsists. (Click chart to enlarge)
Pound (GBP): The Pound is mostly lower this morning trading higher only against USD as money moves back to the Euro as the balance of power in risk scenarios shifts.
Dollar (USD): In a word, disgusting. The current administration is absolutely clueless and should basically just do the opposite of every thought they have. This is not only an embarrassment but also a major problem in the economic psyche of Americans. The unemployment rate ticked .2% higher to 9.8% and will likely reach double digits again by early 2011. Meanwhile the ideologues in Washington still want to raise taxes on job creators (small business) to fulfill some sort of socialist utopia.
Yen (JPY): The Yen is stronger across the board as US economic weakness and the potential affects of QE2 make the Dollar a more attractive vehicle for carry trades.
Well, that was ugly. I don’t know where to begin with the disgust and ire I feel toward the US government, and I have a job! Imagine what those who are part of the “official” 9.8% unemployed (some say true unemployment is closer to 17%) are feeling right now.
The sad part is that the “answer” is to just spend more money to extend unemployment benefits and just throw it on the ‘ol government credit card so that those who are barely clinging to jobs can foot the bill. How about creating pro-business incentives so people can go back to work?
You want a solution? Here’s one. Instead of raiding funding for entitlement programs, we should raid the coffers of the Congressional health and pension plans. All of these people are rich enough to afford to pay their own way. If I see the Obama children with one more passport stamp paid for with my tax dollars, or Pelosi’s private jet bill cost me one more penny, I might head for the hills.
I love the “drama” surrounding Charlie Rangel’s “censure”, as if the public embarrassment of admitting you broke countless laws and enriched yourself is tantamount to becoming one of the official 9.8%!
This country is going downhill very fast. This isn’t change I can believe in. When investors start to realize that even the threat of Euro default is more attractive than what is going on here in the US, you know there’s a big problem.
If you’re not in the FX today, then you may not have a chance.
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