NFP question

NFP came this morning and the data was worse than expected for the usd.
Now all the usd pairs move south and audusd and usdcad move north. I am wondering why would that be? One thing is that both pairs are at the end cycle of donchian channel but that is still not enough to stop the news

"Normally" speaking...(who knows what "normal" is in this market)...When the US posts bad news or worse than expected, this generally triggers a "flight" to safety that effects the US dollar. Depending on what pair you are trading it can effect it in different ways.

USD/JPY and USD/CHF plummeted because everyone is selling the dollar and buying the "safer" currencies. Those being the Yen and Swiss Franc.

In the case of the USD/CAD and/or AUD/USD these two currencies are considered "risk" currencies. Thus people are leaving the currencies and converting them to US dollars...thereby causing the rise in the USD/CAD and the fall in the AUD/USD.

They are then taking those dollars and putting them into other things like USD/CHF or gold. Look at what gold did over the past few hours and you will get a clearer picture.

Now since the AUD is considered a "commodity" currency...that commodity being gold...I'm scratching my head a little over that. But it is clear with the USD/CAD (also a commodity currency). The commodity for the CAD is oil...and if you look at what oil is doing, you will see also why people are selling this currency...converting it to dollars (while the dollar is still cheap) then putting it into something over higher value.

Bottom line...nothing is isolated...everything is connected someway, somehow.

Hope this helps.

This can't be right, because both the euro and the pound strengthened against the USD following the news. I'm fairly certain that the USD is much more of a reserve currency than either of those two, is it not?

In addition, I've always bought into the belief that the TRUE long-term trend, regardless of the pair, is a weakening of the USD. Last year people BELIEVED that the dollar was making a comeback (take EUR/USD for instance), but it has proven to be nothing more than a simple retracement, and the pair has more or less resumed its bullish, long-term trend.

The same goes for USD/CAD and USD/JPY, the only two pairs I trade nowadays. Both pairs are still heading downward as they've always been, with upward retracement being nothing more than just that ... a fleeting short-term trend. There have been no major fundamental changes to justify believing that the dollar is going to do anything except continue to weaken. Long-term analysts of the fundamental concepts could probably state with some certainty that there is very little chance for a dollar resurgence with any kind of staying power.

Even against a currency that is riskier, the US dollar should still lose out in the end, it just wouldn't happen as clearly or as fast for such pairs. In other words, I truly believe the weakening of the dollar will always trump any kind of risk aversion mentality in the end (if those two forces are conflicting, that is, depending on the pair).

This is what I am saying that nfp came worse than expected and usd gained against aud and cad.

constin

Thanks Gspajon and Kibescorp for your explanation.
Constin

if you focus on the long term, you'll be trading in the right direction.

http://forexsb.com/2011/07/nfp-and-t...arket-reality/