13.30 Change in Nonfarm Payrolls

Expectation 210K       Previous 243K       Range (125K, 275K)

The bulk of the range estimates are between 180K-240K.

The start of this year has seen US largely been stronger than expected. Wednesday’s ADP, although in-line with expectations points towards a solid number for NFPs today. At the same time the employment indices in the ISM data also points towards a solid to strong number today. Several sources have touted that the number may find strength today due to unseasonably warm weather effects. However, since 2010, a NFP number of greater than 200k has been followed up the next month with a rather disappointing number, this is something to watch out for. The Unemployment rate is expected to remain unchanged but has only been decreasing over the last few months as a result of people dropping out of labour market participation, which around record low levels at he moment.

Risk markets have started the year very strong and we have seen further strength going into today’s numbers. Notably, we have started to hear talk that the Fed are getting close to implementing another round of asset purchases. This was in a WSJ report earlier this week. With respect to market participants now expecting some form of further easing to occur, possibly even next week, one can make an argument that a weaker than expected NFP number may elicit a contrarian risk on effect after the initial kneejerk reaction is out of the way with. On the other hand a stronger number is unlikely to cause a risk off reaction on the logic of no further stimulus.

13.30 Change in Private Payrolls

Expectation 225K    Previous 257K    Range (120K, 290K)

13.30 Unemployment rate

Expectation 8.3%    Previous 8.3%    Range (8.1%, 8.5%)

12th August 2011
Currency overview
Focus on the Cable (GBP/USD)

Cable has broken lower over the past few sessions as the Dollar has seen a safe haven bid during the turmoil that currently engulfs the markets, breaking back below the Head and Shoulders neckline that has dominated the picture over the past few months.

Thoughts from the trading floor

Monday saw a retest of the recent highs in Cable with the contract opening around 1.6475 and then selling off hard throughout the day. Since then the market continued lower, falling through the 1.6220 area which has acted as good support over the past two weeks, and is now where the neckline comes in. We broke back below this neckline on Wednesday but have since bounced back and are trading around it this morning. This area looks like becoming an important pivot point for the market once again.

Thursday’s low at 1.6107 is now important short term support for the market, having bounced quite impressively from here. A break and close below this point would be a bearish signal and should result in further selling of Cable. For now though this looks to have put a low print in the market and a move back into the trading range of the past two weeks is the most likely scenario.

The medium term outlook is again going to be dominated by the trade in the Dollar. During the chaos that has encapsulated the markets in August the Dollar has generally seen a slight bid against some of the riskier currencies, such as the British Pound and the Euro. These trades have generally been in line with the moves in equity markets. If the equities have made a low for the time being then expect some buying to come back into Cable, with another test of the 1.6475 being the first major target.

Bull View

Although Cable has sold off while the equities have seen big moves lower, Thursday saw an impressive bounce from 1.6110. A move back into the recent range and the bulls will try and target the recent highs soon after.

Bear View

After an impressive sell off the bears have let the market bounce back up above the neckline. A close below 1.6260 would allow the bears to try and retest Thursday’s low.

Futex View

If the market can close above 1.6260 today then we expect a move back into the recent range. Though we will be keeping a close eye on the equities. Any selling there will see Cable dip as well.

Equities were generally subdued on Friday.... (more...)

The Eurostoxx continued to surge higher yesterday.... (more...)

The Dax continued to push higher yesterday.... (more...)

The Bund continued to trade lower yesterday.... (more...)

The Eurostoxx traded lower yesterday...... (more...)

The Dax traded marginally lower yesterday.... (more...)

The Bund closed around unchanged on the day yesterday..... (more...)

The Eurostoxx pushed further higher yesterday.... (more...)