Non Farm Beats, Equities Tank March 9, 2015
Non Farm Payrolls Much Better Causes Equities To Give Back 1/3 Of Yearly Gains
In just another sign of how the Fed and other central banks have killed what used to be free markets we see that a better than expected NFP figure causes not only USD strength across the board, of which is normal< but also causes US equities to tank having their wost day of the year so far.
In what seems to be the Fed playing the “what looks good must be good” card over the last several years. We have to remember that in all previous recessions the recovery afterward was always preceded by the stock market gaining first. This has always been the case since when things start getting better the first thing that happens is an increase in investment. However the last few recession/recoveries have consistently gotten more skewed toward the investment world recovering while the economy lags much further behind meaning that in order to show (pretend) the economy has recovered they have literally changed they way they figure data to show that the economy is getting better when really its just plugging along (hence having to figure in cocaine use and prostitution in GDP data) while the rich get richer and poor get poorer. Nobody says it better than Max in the latest episode so I will let you hear it from him and Stacy.
EUR/USD Blasts Below 1.0900 On NFP
The EUR/USD actually tested much closer to 1.0800 after the blast through 1.0900 with just one more monthly barrier from 2003 before a probable run to parity on the USD. At this point its safer to be open on direction for this pair but this downward move should continue even if they do a deeper pullback today. As long as they cant show any conviction above 1.0862 during London I will look there for the short while open for the same at the Asian highs if they leave the Asian box closer to the lows. The only place I will be looking for a potential long is at the gap open at 1.0825 or just below at the Asian lows and will need to see they refuse to let it pass.
GBP/USD Takes Hit On NFP
The GBP/USD also took the hit from the NFP data but also has a much more significant daily level below at 1.5000 that has decent potential to hold it up if better data starts coming from the UK. I have to say I have my doubts but the level will take some work to break or we will need to see worse data making the probability of any rate hikes from the BOE much lower. They have recently toned down the dribble somewhat but may ratchet it back up to hold the level.
With over a 200 pip move its best to be open here as well but again they will likely push lower although this pair has a better chance of the deeper pullback. The potential levels are dodgy at best with the best short level at the current Asian highs being in such close proximity. If they break above then a test of 1.5168 may be in order even though its rather far away. I will be open for the long from the Asian lows but prefer to see them leave the Asian box closer to the highs before the test and stop run.
EUR/JPY Runs Extended Push
The good NFP data made the EUR/JPY run an extended push Friday so the probability is slightly better that this will continue only because of the stop run to the upside Thursday. Otherwise they could turn for a reversal to push traders out before another move down any time. The best level to short is up at 131.61 but the 131.26 is also valid considering the run from todays lows being 50+ pips from there. I will be open for the long with a stop run to the lows but prefer to be short with my stop at break even waiting for the break down.
Forex News Today
The calendar is quiet on data releases but heavy on potential tape bombs. The Euro Group meetings could leak some news on the Greeks potentially defaulting while Jens Weidmann from the Buba could also throw a wrench in things even though its doubtful. However there are three Fed member speeches to watch out for during the day that could also change the tide on potential rate increases in the US if they are getting concerned about the USD strength.
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