Interest-rates- | Forex Blog

February 1, 2012

5 Day Losing Streak for Yen

Filed under: Forex News — Tags: announced-last, buying-the-yen, chances, continued-its, extremely-high, hurry-otherwise, interest-rates-, japanese, line-at-the, margin-traders, selling-dollars, support, time, watch-out-for, zero-at-least — admin @ 6:45 am

USD/JPY continued its five-day losing streak in early London time as it tests the 76.00 big figure. At the time of writing USD/JPY is 76.05 which is today’s low so far. We hear there are stop losses (large) below this figure but margin traders are holding the support line at the moment in the hope of grabbing a bargain. Since the US announced last week that it would keep interest rates near zero at least until late 2014, long term traders are slowly pricing in this factor by selling dollars across the board including selling dollars and buying the yen. Specifically for today, Japanese exporters and model funds were doing most of the selling. Again 75.76 wasn’t tested yesterday but the chances are extremely high today, then 75.55 (Oct low). Watch out for the 75.35 post war low and also watch out for BOJ intervention – real or rumoured. If that happens expect to see 77.12 in a hurry otherwise the trend is strongly bearish.

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November 29, 2011

Forex Market Outlook 11/29/11

Filed under: Forex News — Tags: account, data, euro, fear, interest, interest-rates-, invest, loonie, trades — admin @ 6:57 am

This morning has started out with the same vigor as yesterday’s market posting early gains on the news of a successful Italian bond auction and riding what looks to at least initially be two days of gains in a row. Global stocks and commodities are higher to start the day, with US dollar weakness.

In Italy, 3-year notes had a bid to cover of roughly 1.5x meaning that there was good demand for the debt contrasted with last week’s German auction that was only 65% subscribed. It should be noted that the yield on the Italian debt was close to 8%, which is a Euro-era high and nearly twice what it was as early as 2 months ago.

What does this tell us? Well, a couple of things. For starters, it shows that the markets have some confidence that Italy will not default and that there may be an increased pace of getting the plans in place to combat this crisis. If the market feels that they can pick up some short-term debt at high yields before credible actions begin to reduce those yields, then that’s a pretty good trade.

But it also tells us that Germany may have some funding problems going forward, as the market deems yields too low to justify the “safe haven” of the Bund, which may not actually be that safe when Germany’s exposure to the rest of Euro zone debt is taken into consideration. In other words, why receive 2% in Germany when you can receive 8% in Italy for nearly the same outcome. If Italy goes down, it would likely take Germany down as well so it’s better to be compensated at a higher level.

Today begins a two-day meeting of EU Finance Ministers that is expected to produce an agreement on how to leverage the ESFS and the actions that will be permitted at the ECB. After pressure from the Obama administration, the need to act for Europe is now.

On the data front, economic confidence figures in the Euro zone came in lower than expected, but wasn’t that expected? So overall, the Euro is pulling back from earlier highs and our chart of the day from yesterday is still in tact, with EUR/USD having held that 1.3430 level.

Overnight in Japan, retail trade figures came in better than expected, showing a gain of 1.9% vs. an expected gain of .7% and household spending decreased just .4% which is better than the decrease of 1.5% that was expected. Perhaps that had to do with the jobless rate which came in worse than expected, showing 4.5% vs. an expected 4.2% which incidentally is half of what the US jobless rate is. Friday’s NFP numbers here should confirm the continued bad news of 9% unemployment unless discouraged worker have left the workforce.

In the UK, home prices came in higher than expected showing that inflation may remain stubbornly high despite the protestations of the BOE who claim that prices will magically fall back to their 2% target within the next year from the current 5% they are experiencing. While this expectation is the justification for monetary easing, the hard data suggests otherwise. Mortgage approvals came in higher than expected.

And lastly here in the US, home price figures will be do out later this morning are expected to show modest declines and consumer confidence figures are expected to show gains from last month but are still near historic lows. I suppose the news of the better than expected “Black Friday” sales and yesterdays “Cyber Monday” sales which also came in better than expected (up 18% from last year) belie those figures. Or it could just be boredom.

Fitch ratings agency finally acted on the Super committee’s failure on debt reduction and moved the US outlook to negative, which means that there is now a 50% of a US credit downgrade within 2 years. Yay for politics!

Meanwhile the markets are giving back earlier gains but are likely to rebound if we can get through the remainder of the Euro session without any negative news from the Finance Ministers meeting. So it looks like we’ll continue to trade the range, albeit a larger one.

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November 25, 2011

Forex Market Outlook 11/25/11

Filed under: Forex News — Tags: a-great-figure-, a-solution-will, aud, course, currency market, dow, interest-rates-, invest, italy, not-surprising, portugal, sentiment, time, unemployment, with-the-short — admin @ 6:56 am

I hope everyone here in the US had a great Thanksgiving yesterday, though the same can’t be said for the markets. We are still in risk aversion mode as the Euro debt crisis continues to plague the global economy so the US dollar has been the favored investment vehicle of choice.

Today is a shortened session here in the US with the stock market open for a half-day session. There is likely to be little action for stocks so the correlative effects of market movements will be minimal. However, it must be noted that with decreased volume there is sometimes increased volatility.

While there is no news due out for the US session, a quick recap of this morning’s news shows that confidence figures in the Euro zone came in worse than expected. While this is not surprising, yesterday’s reports of German GDP and confidence figures were positive. GDP in Germany was 2.5% YoY, as expected. IFO confidence figures all cam e in better than expected which shows that Germany is still moving along, despite the bond auction disaster from earlier this week,

In the UK, GDP figures also came in as expected, showing .5% growth which is not a great figure. It is for this reason that the BOE has been ultra-accommodative despite the high inflation they are experiencing.

Also in the Euro zone, Portugal had their credit rating reduced to junk status, and they have been all but an afterthought as the markets have focused on the Spanish banks and Italy’s government debt.

The picture continues to worsen in the Euro zone and the push for a Euro bond is picking up traction, for those who still want to see the Euro succeed. As this situation drags out, the global economy will continue to suffer and a solution will not be forthcoming overnight.

But we are seeing a bit of a morning bounce here as perhaps some of the selling was overblown. Risk still remains at heightened levels so I’m going to continue with the short-term trading themes until more clarity emerges.

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November 23, 2011

Euro (EUR) Falls On German Bond Disaster!

Filed under: Forex News — Tags: a-warning-shot, chart of the day, crisis-or-the, displeasure, eur, from-the-euro, fundamentals, interest-rates-, market, myself-included, now-resistance- — admin @ 7:41 am

The Euro had been trading a tight range vs. USD for a while as some in the market were shocked (myself included) at how resilient the Euro was. Well today was the day that price broke down and began behaving more like the fundamentals would reflect.

The big news of the morning from the Euro zone is that Germany did not receive bids to cover all of their offering of 10-year notes (known as bunds) which caused interest rates to rise. While the higher rates can certainly be handled, this non-action is essentially a warning shot to the Germans that the markets won’t be buying at current levels for a variety of reasons, whether its their displeasure with the German handling of the EU debt crisis or the fact that the market believes that Germany may be over-exposed and facing trouble of their own.

Heading into tomorrow’s Thanksgiving holdiay here in the US and shortened session on Friday, this is also a good time for markets to de-risk a little. But for now, the previous support for EUR/USD at 1.3430 has been broken and is now resistance. The next move lower for Euro could be to to 1.325.

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November 7, 2011

Forex Market Outlook 11/7/11

Filed under: Forex News — Tags: a-messy-arena, commodity, currencies, decision, interest-rates-, jpy, mike conlon, switzerland, trend, usd — admin @ 6:54 am

Goodbye Greece, hello Italy! That’s pretty much what the markets are saying right now as Greece is in the rearview mirror and now Italy is to the forefront. Over the weekend, Greece PM Papandreou agreed to form a coalition government and to step down from that government when it is formed. In Italy, PM Berlusconi is trying to see whether or not he can hang on to power but it is beginning to look doubtful.

Tomorrow, Italy faces a major vote on its budget and both allies and opponents of Berlusconi are calling for him to step down. His own hubris may get in the way of this being anything but a three-ring circus, but the most important thing to note is that bond yields are rising in Italy as the market is not convinced that they can do enough in the current political environment to slash budgets in order to continue receiving ECB support. Even though he survived a confidence vote a few weeks ago, Berlusconi’s days appear to be numbered.

This is seen as a positive by the markets that feel that Berlusconi has been an impediment to economic health so his departure is preferred. Perhaps then he will be able to release his album of love songs. Seriously. In Greece, the situation may be less eventful but nevertheless risk remains. If a new coalition government is formed, they had better be prepared to institute the terms of the bailout agreement. At times it seemed like Papandreou was the only sensible one there and when he leaves there could be problems.

So the short and long of it is that the euro debt crisis is still very active like a volcano, with the potential to erupt at any time. As contagion starts to affect the larger economies like Italy and Spain, the dominoes could fall very quickly.

On the economic data front, Euro zone retail sales figures came in worse than expected and German Industrial production figures also came in worse than expected, showing signs that Draghi’s “mild recession” call may be spot on. Thursday’s Euro zone CPI report and EC economic growth forecast will highlight the news out of the Euro zone, as will the unfolding drama of Berlusconi trying to hold on to power.

Also, CPI data in Switzerland showed a decline in prices which could be the harbinger of deflationary forces starting to materialize. The unemployment rate remained at 3% as expected, and the Swiss franc is weakening as the SNB contemplates a pre-emptive battle against deflation. Switzerland has been relatively quiet of late after the peg against the Euro was enacted.

There is more data out from the UK this week, highlighted by Wednesday’s GDP estimate and Thursday’s BOE rate policy decision which is expected to produce no change. The Pound has been strengthening as money has been leaving the EU in favor of the UK.

There is also a slew of economic data coming out of China on Wednesday and Thursday which could affect both the Aussie and Kiwi as both of those economies are dependant upon Chinese growth. Australia has employment figures due out on Thursday as well.

In the US, there are no significant data releases to speak of so usually the Fed takes this opportunity to hit the rubber chicken circuit and discuss various economic topics. At the end of the day this will likely amount to nothing but you never know when someone will slip up and say the wrong thing. “Fedspeak” is generally intended to goose markets higher.

Meanwhile commodities, particularly gold, have been trading like safe-haven currencies and have decoupled a bit from the risk trade as they seem like more attractive places to store wealth. Stocks are mixed to start the morning, but I could see risk appetite emerging at some point today.

So there is a lot going on this week, but not much of anything if that makes sense. Berlusconi’s fate will be watched closely by the markets and the quicker he leaves, the better. Italian politics though is a messy arena so expect the markets to remain on edge until clarity emerges.

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November 4, 2011

Forex Market Outlook 11/4/11

Filed under: Forex News — Tags: currency market, dow, forex market, interest, interest-rates-, jpy, live, mike conlon, rate-decision, trend, unemployment — admin @ 7:01 am

Today is “jobs Friday” as we are awaiting the Non-Farm Payrolls report which is expected to show that the economy added 100K jobs, 125K in the private sector and the unemployment rate to remain steady at 9.1%. These are hardly attractive numbers, yet anything remotely close to these will be seen as positive by the markets.

What might be a decent (but unfortunate) prognostication of our jobs figures is the Canadian employment report that came out earlier this morning. Canada produced dismal numbers, showing that they lost 54K jobs when they were expected to have added 15K, and the unemployment rate moved higher to 7.3% vs. an expected 7.1%. This is certainly not good at a time when global recession fears are increasing. Take a look at the chart of the day to see how the market reacted to the Loonie.

The only positive about “jobs Friday” is that it momentarily takes our attention away from the Euro zone debacle. Yesterday as I noted in an update, new ECB chief Draghi reduced interest rates by 25bp in his first official act, preferring to battle economic woes through rate policy rather than quantitative easing.

However it was his speech following the announcement that caused the Euro to tank as he said that the Euro was definitely facing a “mild recession” which could be construed that he sees big problems on the horizon. This assertion could be confirmed by the release of Euro zone PMI figures that all came in lower than expected. In addition Germany, the stalwart economy of the Euro zone, showed that factory orders fell 4.3% vs. an expectation of a gain of .1%. This pushed the YoY figure down to 2.4% from an expected 7.5%. That’s a pretty big miss.

This sentiment is also not lost on the RBA in Australia, who just reduced their growth targets after lowering interest rates earlier this week.

While the economic landscape may be deteriorating, the G-20 is doing its part to hold things together. The undressing of Papandreou caused him to back away from the referendum on the debt deal, but he and his government still face the confidence vote later today. There is all kinds of speculation about what may occur, from his resignation regardless of vote to a new transitory coalition being formed.

One thing though that is certain after all of this political quagmire: Greece does not want to leave the Euro zone. While I have been calling his moves “idiotic” over the past few days, they may turn out to be pretty shrewd after all is said and done. While the game of chicken he played was rather crazy, he essentially is making Greeks decide what it is they really want. While no one over there likes the austerity that is required to remain in the Euro zone, the alternative is far worse. It probably would have been better though had he given EU leaders advance notice of his intentions.

**Update** Non-Farm Payrolls just came in showing a gain of 80K, 104K in the private sector but the unemployment rate ticked lower to 9%. The market is reacting somewhat favorably to these figures as I mentioned that it just needed to be close this morning. Whether or not this is enough to sustain a rally into the close is another story entirely.

For it may be difficult to take risk into the weekend ahead of the Greek confidence vote as the scenario is unlikely and even if Papandreou wins, there’s no telling what may happen over the weekend, including his resignation.

With a recent weak Dollar and interest rate reductions around the globe, inflation fears are starting to increase. Gold shot up yesterday on the Euro rate reduction and may be invoking some of its inflationary hedge properties rather than its risk vehicle status.

With the overhang of risk in the markets emanating from both the Euro debt crisis and the US debt debate, my opinion is that markets are trading lower on fear alone. With the flush of cash moving around the globe, we would be a lot higher if not for these crises.

The US debt commission has largely escaped notice but lets not forget that they have a dead-line of roughly two weeks to get a deal done and if they can’t come to an agreement, automatic cuts kick in and another potential credit downgrade could be forthcoming.

So my bias is definitely to the upside, though I will proceed cautiously as one never knows what politicians may do. If you don’t believe me, look no further than Greece.

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November 3, 2011

ECB Surprises With 25 BP Rate Cut!

Filed under: Forex News — Tags: chart of the day, eur, first, interest-rates-, italy, market, potential, previous, tracking-lower — admin @ 7:32 am

This morning was the first ECB rate policy meeting for the new ECB chief Mario Draghi of Italy and the majority of the market was expecting him to make no change to interest rate policy. That assessment turned out ot be incorrect, as his first official act as ECB chief was to lower European interest rates by 25 bp (basis points).

This shows a transition from the previous regime’s staunch oppostion to inflation and may have been necessary to counteract some of the ill effects generated by the Euro debt crisis and the recent issues with Greece. As the drama in Europe coninues to drag on, contagion worries have spread and bond yields in other countries, most notably Draghi’s Italy, have increased.

So the Euro is tracking lower despite the risk appetite in the market. As you can see in the chart below, 1.3840 was a short-term double top resistance at the R1 daily pivot resistance level vs. USD. With a new committment to a looser monetary policy and the potential for risk aversion in the market due to the Greek shenanigans, we could see alower Euro heading into the weekend, pulling back closer to 1.3650.

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October 31, 2011

Forex Market Outlook 10/31/11

Filed under: Forex News — Tags: china, chinese, currencies, currency, euro, forex market, fundamental, government, interest-rates-, japanese, point, trend, yen — admin @ 7:04 am

This Halloween is turning out to be more trick than treat as the market digests the events of the past week, particularly the Euro debt resolution. This week is starting out in risk aversion mode with US dollar strength and stock market and commodities weakness.

One of the “tricks” from over the weekend was the unilateral currency intervention by the Ministry of Finance in Japan, who took action to weaken the Yen citing excessive speculation and one-sided moves that don’t reflect the underlying economic fundamentals. This has caused the Yen to fall some 4% vs. USD and is the third intervention this year undertaken by the Japanese. It must be noted, however, that this intervention was taken by the government itself and not the Bank of Japan.

So this week has started out with a bang in what is going to be a heavy week for economic data around the globe. A G-20 meeting, Central bank decisions, GDP figures, and employment numbers all can move markets so this week is likely to see some volatility which is great for the shorter-term traders. Let’s start with the highlights region by region from around the globe and discuss the potential data moving events taking place this week.

In Australia, tomorrow’s RBA rate policy decision will be significant if they lower rates by 25bp as some are expecting, though the overall consensus is still for no change. This means that the statement will likely be dovish as inflation concerns are less important than the global growth story. This announcement will be preceded by Chinese PMI manufacturing figures which may be more impactful as it gives a gauge of Chinese growth which ultimately is a proxy for the Australian economy.

In New Zealand, building permits plunged by some 17% although gains of 2% were expected and Wednesday’s unemployment rate is expected to improve to 6.4%.

In the Euro zone, there are still many questions to be answered with regard to the details of the resolution and now it looks like banks want to use accounting gimmicks to re-capitalize rather than raise private funding. CPI data came in slightly higher than expected, showing inflation at 3% vs. the 2.9% expectation. This is unlikely to impact Thursday’s rate decision, though the ECB may attempt to come off hawkish to prove they are sticking with their mandate. German retail sales figures came in lower than expected and their unemployment figures are due out on Wednesday.

The Pound is lower as home price figures came in lower than expected and tomorrow’s GDP figures are expected to showing slow growth, though it must be noted that the decline in government spending may be responsible. Various PMI figures are spread out along the week so these may be better barometers of the health of UK business and industry.

In Canada, GDP figures came in better than expected this morning, showing a YoY figure of 2.4% vs. the expectation of 2.2% with the quarterly figure higher by .1%. Raw materials and producer prices were also higher so there may be signs that inflation is starting to pick up. Friday’s employment report is expected to show 15K jobs added and the unemployment rate to remain steady at 7.1%.

And finally here in the US, this Friday’s NFP is expected to show a gain of 95K jobs and the unemployment rate to remain steady at 9.1%, though those estimates can change in the ensuing days. Wednesday’s FOMC meeting may be significant if Bernanke hints at further monetary easing or QE3. While corporate earnings have been good, unemployment has been stubbornly high and the Fed chief just can’t help himself and see the need to tinker with policy as if it makes a difference. At this point he is likely pushing on a string and money can’t get much cheaper—its up to fiscal policy now to determine the fate of the economy and whether or not confidence will be instilled.

The deficit super-committee is charged with finding an answer and at this point the prospects don’t look good. Add in a G-20 meeting this week which may show how much IMF involvement (read US taxpayer) is included in the Euro debt deal and we will see some volatility.

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October 26, 2011

Forex Market Outlook 10/26/11

Filed under: Forex News — Tags: account, announcement, correlations, currency trading, euro, europe, interest-rates-, trader, usd — admin @ 7:10 am

Today is the day of reckoning for the Euro as the market is expecting the final resolution to the Euro debt crisis. At this point it is still uncertain at exactly what time the details of the plan will be released so stay on your toes today and pay attention to the news!

Yesterday’s risk aversion and subsequent sell-off non-withstanding, the markets have been moving markedly higher since early October and it looks like we have put in a bit of a “V-bottom”, which I identified in yesterday’s chart of the day. It will be interesting to see if the market can sustain this rally in the face of the Euro announcement.

There are many rumors circling around the details of the plan so I will throw a few out there that I am hearing but take them with a grain of salt as they may be utterly worthless when the plan is announced.

For starters, Greek private bondholders will be taking a “voluntary” 50% haircut on their holdings, meaning losses. How this doesn’t constitute a technical default is beyond the scope of my limited understanding, but If I held bonds and CDS, I would push for default and not voluntarily agree to losses as I can get paid out 100% from the insurance. This may take a while to play out and I am as intrigued as anyone to see how it goes.

Next, the size of the EFSF is rumored to be in the $1 trillion dollar range, though it is uncertain if this comes as a combination of the current EFSF and the ESM (two separate facilities) or if they plan to leverage up the fund through the ECB. Banks will need to be re-capitalized to stem the losses from the haircut on the Greek bonds, and will need to be shored up if contagion occurs.

The idea of an SPV, or special purpose vehicle, is being floated that will allow private investors to invest with some sort of guarantee or backstop from the funds. This may be a way to funnel more IMF aid into the equation.

Lastly, there needs to be increased fiscal austerity, most notably now from Italy as they are the region’s 3^rd largest economy and are currently being vilified as the next potential domino to fall. It is amazing to me that no one even talks about Portugal or Ireland any longer.

So what is my outlook? I think that the markets will rise on the announcement, perhaps dramatically, only to begin to fall once the details are released. I think EUR/USD can get above 1.40 today, but resistance up at 1.413 may hold so if the3 situation presented itself, I would probably be looking to short the pair in the high 1.40s with the hope that it could move down to 1.375 where at that point I would be a longer-term buyer.

Other news out there today is that CPI data in Australia came in lower than expected, reducing expectations for further rate hikes and actually putting rate reductions into play. While the RBA will likely hold for a bit to see how this all shakes out, they will be keeping a keen eye on inflation. Later tonight, the RBNZ will be out with New Zealand’s rate decision and a change is unlikely considering their lower CPI data reported yesterday.

Here in the US, durable goods orders fell less than expected which is a positive I suppose, but yesterday’s consumer confidence figures were absolutely atrocious. However it is important to note the discrepancy between what people say and what they actually do. Later this morning, new home sales will be out.

But all eyes and ears will be waiting for the Euro announcement. The markets appear poised to move higher as stock market returns have been flat for the year so if you’re a big-time money manager, you essentially have one quarter to make it happen and earn some cash or even keep your job. In addition, I think global inflation has been somewhat masked by the cloud of uncertainty of the euro debt crisis and we have seen recent big-time gains in commodities, most notably in oil and gold which are back above $90 and $1700 respectively.

The idea that QE3 may be on the table is likely contributing to Dollar weakness, but all of these other factors are important as well. US corporate earnings have largely been better than expected which means that companies gain make money in a downbeat economy and despite barriers created by bad government policies and potential higher taxes.

With a declining US dollar and next to nothing bond yields, the stock market is likely going to be the market of choice for investors to close out the year so I expect the correlations in the forex market to continue to keep up. The Dollar weakness theme is evidenced by a strengthening Japanese yen, which is at new all-time highs of 75.75. While Japanese officials are crying, there may be very little they can do about it.

So stay on your toes today and be quick to react. Don’t try to be a hero in front of these markets, as there is no telling what may happen. Good Luck!

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October 5, 2011

Forex Market Outlook 10/05/11

Filed under: Forex News — Tags: account, avoid-the-topic, currency-pairs, gbp, interest-rate, interest-rates-, invest, mike conlon, number, practice account, trend — admin @ 7:06 am

Was yesterday’s intense rally just a pause in the selling or does this mark a reversal of trend? This is the million dollar question and one that the markets are weighing very carefully. The catalyst for yesterday’s move higher was none other than Fed Chairman Bernanke who stated in his speech to the Joint Economic Committee that further monetary stimulus could be forthcoming.

This gave the markets an immediate shot in the arm and they rallied on those words as the thought of more free Fed money is too good to ignore. Many thought, including myself, that given the politics of further easing he might avoid the topic, but with the recent selling taking place something had to be done. So I applaud him for his courage, though political pressure seems to be waning against complete opposition to further monetary stimulus.

This was enough to push markets higher including the Euro, which had maintained strength until this morning after Moody’s downgraded Italy by three notches and warned that further downgrades of other countries could occur. Couple this with weaker PMI services figures from the Euro zone and declining retail sales figures (-1% vs. an expected -.7%) and the economic picture doesn’t look much better than it did two days ago.

Yet for some reason the markets believe that EU leaders are making serious strides toward a debt crisis resolution this time, all but admitting that they haven’t taken this crisis seriously enough to this point. One positive note was a vote of confidence in Portugal as investors passed on an opportunity to receive early payouts from a bond issue, electing to wait it out.

In the UK, GDP figures came in slightly worse than expected, showing a gain of .1% for the quarter vs. an expectation of .2%, bring the YoY figure down to .6% from the expected .7%. While this does indeed show a declining economic picture, it is unclear if this is enough to cause the BOE to increase asset purchases at tomorrow’s rate decision.

The EU rate decision also tomorrow, though, is another story. The ECB has been reluctant to step up in the wake of the debt crisis and it will be interesting to see what if anything they announce tomorrow. They could use this platform not to change rate policy per se, but rather announce plans for how they plan to combat the debt issue. The difference between the two rate decisions is that the BOE does not issue a statement with their decision, and the ECB does.

Rounding out the news from around the globe, Australian retail sales figures came in better than expected, showing a gain of .6% vs. an expectation of .2%. This has helped push the Aussie higher in conjunction with the Dollar weakness we saw yesterday and the follow-through this morning.

The ADP jobs report came out here in the US this morning and showed an increase of private sector jobs of 91K, vs. an expectation of 75K. While this number bears no significant correlation to Friday’s Non-Farm Payrolls report, it should be noted that although Friday’s NFP is expected to show a gain of around 60K, the number of private sector jobs expected to be added is closer to 100K.

While the markets started the morning in risk-taking mode, it appears as though we are giving back some earlier gains as both stocks and risk assets are selling off a bit. While still in positive territory, it will be interesting to see if this rally can be sustained or if it was just a one-day wonder.

So today may be what we call an “inside day”, where we make neither new highs or lows as we wait for the rate decisions of tomorrow to guide sentiment. And of course any news out of the Euro zone will be dissected, though the usual “no news is good news” mantra may not hold water in this situation. Clarity form the Euro zone is needed, and not obscurity.

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