WHO WANTS TO BUY DOLLARS?
Who wants to buy dollars? Based upon today’s price action, no one does. The non-farm payrolls report was not as weak as the market had feared and in fact was pretty good when taking into consideration prior revisions. A net of 54k jobs were lost in the month of August, approximately 50 percent less than economists had anticipated. Unsurprisingly, the dollar soared on the heels of the release but quickly lost ground after the non-manufacturing sector report showed a slowdown in service sector activity. The reversal was not surprising because ISM conflicted with NFP but what was interesting was the only asset class that pulled back was currencies after the ISM report. The dollar gave up all of its gains against the Japanese Yen and weakened further against the euro, British pound and commodity currencies. Stocks and bonds on the other hand shrugged off the number with equities holding onto their gains for most of the day while bond yields rose across the board. Given the rise in stocks the rally in risk currencies such as the EUR/USD and GBP/USD are understandable but the sell-off in USD/JPY suggests that some investors are not convinced that the good labor market number is enough of a reason to buy dollars. Compass FX
Who wants to buy dollars? Based upon today’s price action, no one does. The non-farm payrolls report was not as weak as the market had feared and in fact was pretty good when taking into consideration prior revisions. A net of 54k jobs were lost in the month of August, approximately 50 percent less than economists had anticipated. Unsurprisingly, the dollar soared on the heels of the release but quickly lost ground after the non-manufacturing sector report showed a slowdown in service sector activity. The reversal was not surprising because ISM conflicted with NFP but what was interesting was the only asset class that pulled back was currencies after the ISM report. The dollar gave up all of its gains against the Japanese Yen and weakened further against the euro, British pound and commodity currencies. Stocks and bonds on the other hand shrugged off the number with equities holding onto their gains for most of the day while bond yields rose across the board. Given the rise in stocks the rally in risk currencies such as the EUR/USD and GBP/USD are understandable but the sell-off in USD/JPY suggests that some investors are not convinced that the good labor market number is enough of a reason to buy dollars. Compass FX
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