Before NFP there will be a try to place the price close to R1 Level. This will add more uncertainity to retailers.
- #52,961
- Sep 7, 2012 1:51am Sep 7, 2012 1:51am
- Joined Oct 2009 | Status: Whn Market Warms u..U keep it Kool | 6,578 Posts
- #52,962
- Edited 4:33am Sep 7, 2012 2:01am | Edited 4:33am
- Joined Aug 2008 | Status: Persist Until Something Happens | 17,898 Posts
Good morning and happy Friday to all.
Now that Mario Draghi and the ECB governing council have laid out all we need to know about the bond buying program, it is absolutely confirmed that:
1. In order for the ECB to buy bonds, countries would first have to apply for aid via the EFSF/ESM and sign an MOU (Memorandum of Understanding) agreeing to the austerity and fiscal reform conditions similar to those imposed on other program countries such as Greece, Ireland and Portugal.
2. Subject to those conditions, the ECB may undertake to purchase short dated (1 to 3 years) bonds in the secondary market. However, such purchases will be suspended if the recipient country fails to comply with the bailout program terms at any time and/or if the ECB's objective of correcting monetary policy transmission breakdown is reached.
3. Liquidity provided through any such purchases will be soaked up (Sterilized) via weekly note auctions in the same way that the ECB did during the SMP program. Also, such purchases and sterilization actions will be reported on a weekly basis with full detailed reporting on a monthly basis.
4. Creditor seniority will not be imposed on any such purchases, meaning that the ECB will not have preferred creditor status over private bond holders.
5. On top of all that, the ECB has lowered the bar for eligible collateral when banks seek liquidity from the ECB. More specifically, the credit ratings of sovereigns will no longer apply. In other words, the ECB is now willing to accept junk bonds as collateral from financial institutions.
...and that's it in a wrap.
Now on to the event of the day; the non-farm payroll report (NFP), also known as the holy grail of all economic data. As of yesterday morning the consensus was for a +125K headline number and the median expectation was in line with it. However, after a much better than expected ADP number followed by better than expected Jobless Claims and ISM Non-Manufacturing PMI numbers, although the consensus remains the same, it makes sense that the market expectation for today's number would be higher than it was yesterday.
So, here's what I think. Today's NFP market expectation is probably around +140K to +160K. If my assumption is correct, a number of 150K or higher would deflate the expectations of the QE3 bandwagon and probably be USD positive. Likewise a headline number below 150K would give the QE3 bandwagon more reasons to celebrate and result in a USD negative move. When analysing the numbers as they are released, I will also be looking very closely to the unemployment rate, any revisions of the previous headline number and probably more importantly to the average hourly earnings and average work week. Obviously the headline number will have the most influence, but if it comes in as expected, then it will be the other numbers that will determine which way this goes.
As I have always mentioned in the past, the best pair to trade the NFP when the number is significantly below or above expectations has traditionally been the USD/JPY. Long USD/JPY on a better than expected number and short it when the number disappoints.
For those of you who are interested, we also have Canadian employment numbers due out at the same time.
Turning to a technical view of the EUR/USD, my view has not changed. I still see a rising wedge, bearish MacD divergence and a confluence of resistance and a heavy supply zone between 1.2600 and 1.2680 extending to 1.2740. As such, I currently have a sell limit order waiting at 1.2680 which I may adjust as I see fit depending on how things roll along during the course of the trading day.
Best of luck to all today.
E/U Daily
Now that Mario Draghi and the ECB governing council have laid out all we need to know about the bond buying program, it is absolutely confirmed that:
1. In order for the ECB to buy bonds, countries would first have to apply for aid via the EFSF/ESM and sign an MOU (Memorandum of Understanding) agreeing to the austerity and fiscal reform conditions similar to those imposed on other program countries such as Greece, Ireland and Portugal.
2. Subject to those conditions, the ECB may undertake to purchase short dated (1 to 3 years) bonds in the secondary market. However, such purchases will be suspended if the recipient country fails to comply with the bailout program terms at any time and/or if the ECB's objective of correcting monetary policy transmission breakdown is reached.
3. Liquidity provided through any such purchases will be soaked up (Sterilized) via weekly note auctions in the same way that the ECB did during the SMP program. Also, such purchases and sterilization actions will be reported on a weekly basis with full detailed reporting on a monthly basis.
4. Creditor seniority will not be imposed on any such purchases, meaning that the ECB will not have preferred creditor status over private bond holders.
5. On top of all that, the ECB has lowered the bar for eligible collateral when banks seek liquidity from the ECB. More specifically, the credit ratings of sovereigns will no longer apply. In other words, the ECB is now willing to accept junk bonds as collateral from financial institutions.
...and that's it in a wrap.
Now on to the event of the day; the non-farm payroll report (NFP), also known as the holy grail of all economic data. As of yesterday morning the consensus was for a +125K headline number and the median expectation was in line with it. However, after a much better than expected ADP number followed by better than expected Jobless Claims and ISM Non-Manufacturing PMI numbers, although the consensus remains the same, it makes sense that the market expectation for today's number would be higher than it was yesterday.
So, here's what I think. Today's NFP market expectation is probably around +140K to +160K. If my assumption is correct, a number of 150K or higher would deflate the expectations of the QE3 bandwagon and probably be USD positive. Likewise a headline number below 150K would give the QE3 bandwagon more reasons to celebrate and result in a USD negative move. When analysing the numbers as they are released, I will also be looking very closely to the unemployment rate, any revisions of the previous headline number and probably more importantly to the average hourly earnings and average work week. Obviously the headline number will have the most influence, but if it comes in as expected, then it will be the other numbers that will determine which way this goes.
As I have always mentioned in the past, the best pair to trade the NFP when the number is significantly below or above expectations has traditionally been the USD/JPY. Long USD/JPY on a better than expected number and short it when the number disappoints.
For those of you who are interested, we also have Canadian employment numbers due out at the same time.
Turning to a technical view of the EUR/USD, my view has not changed. I still see a rising wedge, bearish MacD divergence and a confluence of resistance and a heavy supply zone between 1.2600 and 1.2680 extending to 1.2740. As such, I currently have a sell limit order waiting at 1.2680 which I may adjust as I see fit depending on how things roll along during the course of the trading day.
Best of luck to all today.
E/U Daily
Those who say it cannot be done should not interrupt those who are doing it
- #52,963
- Sep 7, 2012 2:02am Sep 7, 2012 2:02am
- Joined Aug 2008 | Status: Persist Until Something Happens | 17,898 Posts
Those who say it cannot be done should not interrupt those who are doing it
- #52,964
- Sep 7, 2012 2:06am Sep 7, 2012 2:06am
- Joined Aug 2008 | Status: Persist Until Something Happens | 17,898 Posts
Those who say it cannot be done should not interrupt those who are doing it
- #52,965
- Sep 7, 2012 2:09am Sep 7, 2012 2:09am
- Joined Aug 2008 | Status: Persist Until Something Happens | 17,898 Posts
Mixed bag this morning
Those who say it cannot be done should not interrupt those who are doing it
- #52,967
- Sep 7, 2012 2:39am Sep 7, 2012 2:39am
- Joined Aug 2008 | Status: Persist Until Something Happens | 17,898 Posts
Thanx PT...great morning update as usual
Between ur's & my sell limits we will drive the ol coute down....
Those who say it cannot be done should not interrupt those who are doing it
- #52,968
- Sep 7, 2012 2:42am Sep 7, 2012 2:42am
- Joined Aug 2008 | Status: Persist Until Something Happens | 17,898 Posts
Those who say it cannot be done should not interrupt those who are doing it
- #52,970
- Sep 7, 2012 2:47am Sep 7, 2012 2:47am
- Joined Dec 2011 | Status: Don't put all ur eggs in one basket | 3,453 Posts
Good Morning everyone.
- #52,971
- Sep 7, 2012 2:48am Sep 7, 2012 2:48am
- Joined Dec 2011 | Status: Don't put all ur eggs in one basket | 3,453 Posts
- #52,972
- Sep 7, 2012 2:49am Sep 7, 2012 2:49am
- Joined Dec 2011 | Status: Don't put all ur eggs in one basket | 3,453 Posts
Good morning and happy Friday to all.
Now that Mario Draghi and the ECB governing council have laid out all we need to know about the bond buying program, it is absolutely confirmed that:
1. In order for the ECB to buy bonds, countries would first have to apply for aid via the EFSF/ESM and sign an MOU (Memorandum of Understanding) agreeing to the austerity and fiscal reform conditions similar to those imposed on other program countries such as Greece, Ireland and Portugal.
2. Subject to those conditions, the ECB may undertake to purchase short...
It's bit early to feed her a GnT, but I've got everything prepared for her.
If she breaks this upper line she may have an identiy crises confused she's a Buzz Light Year or something...but I think we just getting all the action before the news so possibly a false BO to suck in the poor souls..
Those that say do not know. Those that know do not say.
- #52,974
- Sep 7, 2012 2:58am Sep 7, 2012 2:58am
- Joined Dec 2011 | Status: Don't put all ur eggs in one basket | 3,453 Posts
- #52,976
- Edited 3:41am Sep 7, 2012 3:20am | Edited 3:41am
- Joined Dec 2011 | Status: Don't put all ur eggs in one basket | 3,453 Posts
- #52,977
- Sep 7, 2012 3:40am Sep 7, 2012 3:40am
- Joined Oct 2009 | Status: Whn Market Warms u..U keep it Kool | 6,578 Posts
1.2750 Zone is what I am targetting for my Sale Order. This Zone is perfect for Selling.
- #52,978
- Sep 7, 2012 3:47am Sep 7, 2012 3:47am
- Joined Oct 2009 | Status: Whn Market Warms u..U keep it Kool | 6,578 Posts
- #52,979
- Sep 7, 2012 3:53am Sep 7, 2012 3:53am
- | Joined Nov 2011 | Status: Trader | 2,104 Posts
BTW, good morning folks!
I observe your reality but live my own. 
- #52,980
- Sep 7, 2012 3:55am Sep 7, 2012 3:55am
- Joined Dec 2011 | Status: Don't put all ur eggs in one basket | 3,453 Posts
Always good but where's the crude update?
BTW, good morning folks!
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