Friday November 6, 2009 - 16:59:10 GMT
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Cinneas.com - blog.cinneas.com
Why has EUR/JPY Sold Off Post Payrolls?
One thing leaves us scratching our heads this morning, and that is the reaction EUR/JPY has taken following the Payrolls data. While certainly the unemployment rate came in worse than expected, and is likely to be the headline over the weekend, the actual payrolls number came in better than expected if you throw in the revisions to prior months. The stock market realizes this and has failed to drop, however EUR/JPY has not.
In general we expect EURJPY and other JPY crosses to rally on good economic data as the risk trade is re-entered. This has not been seen this morning. We would expect this to correct later today or on Monday, especially given the comments from Japan's Vice Finance Minister regarding JPY strength. If anything today's data tells us more of the same and the trend should continue. The Fed is on hold and so the carry trade should resume its march; at least until payrolls numbers turn positive.
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