Thursday update..Weak US data weighs on USD

  • Yesterdays weaker ISM employment data seems to be pointing to a possible disappointing NFP number on Friday. We are certainly due one and what better time than ‘ Good Friday[ when liquidity will be very poor. Mind you we have thought that before and been wrong but this time surely a 250/- plus print is not on the cards.
  • US bond yields dipped and so did the USD by and large . I still wonder if more of the record EUR/USD shorts are going to be scrambling out Friday and Monday.
  • Elsewhere its still vary much wait and see with Iran Nuclear deadline talks extended along with any pronouncement on Greek proposals. All adding up to some perfect storm of events at some point.
  • Oil has nudged up to $ 50 which helped Asian stocks apparently. I cant fathom the link there but what was maybe more interesting is that the JPY didn’t weaken on a 1.5% rise in the Nikkei but stuck with the crowd that were mostly firmer against the USD.
  • UK politics is in full election mode now with a 7 party debate on TV tonight it will likely be as near a circus as anything could get. By the looks of it though the UK electorate seems determined to screw things up for the UK economy and possibly the constitution. Still its amazing what voters believe just ask the Greeks. The pound could still take a good hammering and I will add to GBP/USD shorts on any bounce.
  • European data continues to be better but in the Eurozone its noticeable that France still lags with PMI still sub 50 ( contraction ) while Ireland remains the poster boy with Spain just behind.
Market Summary
  • Forex..USD generally firmer as EUR/USD moved over 1.08 to a high of 1.0845 and now trades at 1.0815. I’m kind of relieved to be square at the moment. Other currencies gained less leaving EUR firmer on crosses. USD/JPY 119.60 GBP/USD 1.4812 and USD/CAD 1.2615 improved against the USD but the AUD ( 0.7665 ) has been the biggest loser as weak data added to ideas of an up and coming rate cut.
  • Equities..US stock indices were in the red again and are beginning to trade a little poorly. I think we will get a clearer idea of the market after NFP , whatever the number. Certainly a slip in bond yields didn’t help equities or the bounce in oil. Asia was higher and Europe opens mixed.
  • Bonds ..US 10 YR. yield fell to 1.8573 as week data emerged . Of course Fridays NFP will be the real guide and a knee jerk either way is possible. In Europe yields still very subdued and I still have to pinch myself that Italy can borrow 10 YR. at 1.2340% . Frankly I’d choose a mattress rather than them but it shows the power of QE.

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