Friday April 1, 2005 - 13:02:03 GMT
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FX Thoughts for the Day - www.fxthoughts.com
FX Thoughts - Evening - 01/04/05.......1210 GMT
On the US Non Farm Payroll Data
Economists have been revising their forecasts for today's data, down from an earlier consensus of +225K to +200K now, as compared +262K for Feb-05.
We think each release needs to be seen not only in relation to the previous one, but in context of a longer history. Please click on http://www.kshitij.com/graphgallery/usnfp.html for a chart on the monthly changes in the US NFP since April '96.
Technically, the numbers can come in anywhere between 170-300K. We are not qualified to make a guess as to what the number will be.
What is important to note is that whatever the data turns out to be, the US economy will NOW be adding somewhere near 250K jobs a month. This is the same average which prevailed in the period Apr-96 to Feb-00. That was a period of strength in the USD Index, which rose from 88 in Apr-96 to 106 in Feb-00 (and then continued rising till 120 in Jan-02).
Or in other words, at anywhere above 200K per month, the NFP data does not provide reasons to sell the Dollar on a long term basis. Short-term (1hour to 3 days) volatility is a different matter.
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