Thursday October 7, 2004 - 10:46:30 GMT
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FOREX: US OPEN MARKET POINTS 10-07-04
A very quiet night in the FX markets as dearth of data and the monthly NFP vigil make for very listless trading. The most interesting eco news tonight comes from Down Under as Australian employment expands by 60K instead of only 30K expected. The data is meaningful for several reasons. First and foremost it should greatly help the incumbent, Prime Minister Howard, in this week-end’s National election. The race has been a dead heat and positive employment data could well be the tipping point that keeps him in power. The market will view Mr. Howard’s re-election as a positive, as he is a well known entity and FX markets typically abhor political change. Secondly, the robust employment data may compel the RBA to reconsider its moratorium on rate hikes at the next monthly meeting. Of course one data point does not a trend make, but we may just have to eat crow after last week’s “Fade the Carry” piece.
Employment is on the minds of most FX traders as tomorrow US reports the monthly Non-Farm Payroll numbers. The consensus expectation is for 150K but the range amongst the analysts is especially large with high at 250K and low at –10K. The numbers will be further muddied up by BLS revisions to past data which may add an additional 280K jobs during Mr. Bush’s tenure. Political implications aside, we would be highly skeptical of a strong NFP number. As we’ve pointed out in our weekly Trade or Fade report, the weekly initial jobs data which on an aggregate basis has been a good predictor of NFPs, has taken a sharp turn for the worse in the last month. While many dollar bulls would like to attribute the upticks to Hurricane season, we note that last week 38 out 50 states reported an increase in jobless claims. There are no hurricanes in Ohio. Finally, Monday’s Challenger report of announced corporate layoffs increased by 41% on a year over year basis – hardly a sign of strong job generation. Handicapping the NFP has been a thankless task this year, with most analysts missing both to the upside and the downside. We certainly posses no crystal ball but recent data suggests weakness rather than strength.
FX Spot Overnight
- EUR back and forth from 2270 –2290 as traders square up for NFP
- JPY remains weak as oil hits 52 overnight
- GBP consolidates below 7800 after yesterdays bad data
- CHF 30 pip range just like euro
11:00GMT – (7:00 AM EST) GBP BOE Rate Announcement Expected at 4.75%, Previous 4.75%
12:30GMT – (8:30 AM EST) USD Initial Jobless Claims (OCT 2) Expected at 355K, Previous 369K
19:00GMT – (1:00 PM EST) USD Consumer Credit (AUG) Expected at 6.0Bn, Previous 10.9Bn
13:30GMT – (9:30 AM EST) US Fed's Ferguson speaks at Cato Institute
16:00GMT – (12:00 PM EST) US Fed's Guynn - Payments in Americas Conf.
17:00GMT – (1:00 PM EST) US Fed's Bernanke - Central Bank Communication
18:30GMT – (14:30 PM EST) Greenspan opening remarks at St. Louis Conf.
21:30GMT – (5:30 PM EST) US Fed's Mc Teer speaks on US econ in NY
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