Friday, September 5th 2014
Nonfarm payroll number came out this morning and it was a massive miss, 142k vs 225k estimated. US dollar dropped following the news before bouncing back. Equities rises because investors are now hoping that the miss will prevent Federal Reserve from raising rates and further tightening. This is an example why our market is “manipulated” because market rises with good data and rises with bad data in hoping that central banks will keep the heroin (QE) running. I suppose we should long S&P500 until this paradigm stopped 🙂
Trade #1 – Long GBP/USD at 1.63311
Stupid trade. Not even following the rules. Clearly I wasn’t thinking. Took a -10 pips loss.
Trade #2 – Short USD/JPY at 104.90
Took the trade after NFP miss per rule. Opened the trade at closing of the first candle that broke pivot and took a +18 pips profit. Very strange price action afterwards because USD bounced back up to around the pivot level and essentially erasing the drop after NFP miss.
I suspect this is an indication that USD will continue the strength against its peers. Euro is clearly trying to go to 1.20 level to perhaps “reset” its flailing economy and Yen might be subject to further devaluation by BOJ after the ECB cut yesterday. When considering those factors, USD looks to be the cleanest shirt in the dirty laundry basket. Moreover, the Fed is not likely to introduce more stimulus measure, in fact, they are more likely to actually keep the taper going this year. It is no wonder the Dollar Index has been going strong.
Long term view from yesterday still stands, long USD/JPY, short EUR/USD, and long commods (AUD and maybe NZD) against JPY.
News alert
Next week presents a few important data but RBNZ Rate decision on Wednesday evening, Aussie employment and Chinese CPI on Thursday evening, as well as US Retail sales figure on Friday morning will be most notables. Get ready to trade NZD and AUD that evening.
Happy trading!
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