Friday March 4, 2005 - 10:29:03 GMT
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FOREX: US OPEN MARKET POINTS 03-04-05
Is the Dollar Setting Up for a Failure?
500K? Seems outrageously high, yet IFR markets reports that some traders are eyeing just such a blow out number from today’s Non-Farm payroll report. Though far less euphoric, the latest Deutsche Bank/Goldman Sachs/ICAP derivatives auction also projected results of 235K slightly above the Bloomberg consensus of 225K.
Certainly, it is easy to see the bullish case for strong NFP’s. As we’ve noted before, the Help Wanted index printed at two year high of 41 and yesterday’s ISM Services employment component jumped more than 7 points from 52.2 to 59.7, suggesting that that demand for workers in the service sector - which comprises more than 70% of US economy - is very strong.
Yet with expectations geared so highly to the upside, dollar bulls may be setting themselves up for “heads I win tails you lose” trade. The dollar may find itself in the unenviable position of having to outperform the already inflated market sentiment just to keep its bid. We have long given up the art of handicapping the NFPs since it seems to be primarily an exercise in futility. Last year the consensus number failed to come anywhere near the actual result 10 out of 12 months and like always the smartest trade may be stand on the sidelines ahead of the data. Stronger NFPs will certainly provide the Fed with ample ammunition to raise rates higher, but the question facing traders today is will they lead to a rally in the greenback?
FX Spot Overnight
- EUR holds support at 3100, rallies to 3125 ahead of NFP
- JPY oil weighs on yen as unit trades 105.35
- GBP drops below 9100 as housing data muted causing doubt of rate hike
- CHF at 1800 slightly weaker than the euro
- 11:00GMT – (06:00 AM EST) EUR Ger. Factory Orders (m/m) (SA) (Jan. P) Expected –4.5% Previous 8.2%
- 11:00GMT – (06:00 AM EST) EUR Ger. Factory Or. (y/y) (NSA WDA) (Jan. P) Expected 4.0% Previous 9.1%
- 13:30GMT – (08:30 AM EST) USD Unemployment Rate (FEB) Expected 5.2% Previous 5.2%
- 13:30GMT – (08:30 AM EST) USD Average Hourly Earnings m/m (FEB) Expected 0.2% Previous 0.2%
- 13:30GMT – (08:30 AM EST) USD Average Hourly Earnings y/y (FEB) Expected - Previous 2.6%
- 13:30GMT – (08:30 AM EST) USD Change in Non-Farm Payrolls (FEB) Expected 225K Previous 146KK
- 13:30GMT – (08:30 AM EST) USD Change in Manufacturing Payrolls (FEB) Expected 7K Previous –25K
- 13:30GMT – (08:30 AM EST) USD Average Weekly Hours (FEB) Expected 33.8 Previous 33.8
- 14:45GMT – (09:45 AM EST) USD U. of Michigan Confidence (FEB F) Expected 94.5 Previous 94.2
- 15:00GMT – (10:00 AM EST) USD Factory Orders (JAN) Expected -0.1% Previous 0.3%
- 15:00GMT – (10:00 AM EST) USD Factory Inventories (JAN) Expected 0.9% Previous 0.1%
- 15:00GMT – (10:00 AM EST) USD Ivey Purchasing Managers Index (FEB) Expected 54.3 Previous 50
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