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Economic Growth Yes, But What About Jobs?

Mon, Nov 2 2009, 08:49 GMT
by Alaron Team

Alaron

Commitment of traders data released Friday October 30th showed an decrease in positions betting against the US Dollar last week. Significant changes include a large decrease in short positions betting on the Sterling for the second week and decreases in net long positions in Australian and Canadian dollars.

JAPANESE YEN (Contracts of 12,500,000 yen)

10/27/09 week 10/20/09 week

Long 36,076 49,401

Short 18,546 18,216

Net 17,530 31,185

EURO (Contracts of 125,000 euros)

10/27/09 week 10/20/09 week

Long 67,843 77,829

Short 34,974 41,796

Net 32,869 36,033

POUND STERLING (Contracts of 62,500 pounds sterling)

10/27/09 week 10/20/09 week

Long 21,736 15,644

Short 53,167 58,962

Net -31,431 -43,318

SWISS FRANC (Contracts of 125,000 Swiss francs)

10/27/09 week 10/20/09 week

Long 24,104 30,017

Short 6,259 6,164

Net 17,845 23,853

CANADIAN DOLLAR (Contracts of 100,000 Canadian dollars)

10/27/09 week 10/20/09 week

Long 41,261 52,689

Short 5,806 9,152

Net 35,455 43,537

AUSTRALIAN DOLLAR (Contracts of 100,000 Aussie dollars)

10/27/09 week 10/20/09 week

Long 59,128 62,429

Short 6,241 8,439

Net 52,887 53,990

(Source Reuters)

Last week the US GDP showed the economy grew in the 3rd quarter by 3.5%. Optimists may say this indicates the economy is emerging from the worst recession in 70 years, while others would point to the economic stimulus programs including "Cash for Clunkers" and the $8,000 tax credit for first time homebuyers which contributed to the positive GDP report last week as the reason for the gain, suggesting the economy may still struggle in the coming months.

Either way, it is highly unlikely the FED will make any changes in it's FOMC meetings Tuesday and Wednesday. Most analysts expect the FED to keep interest rate hikes on hold through mid-2010, according to Reuters News.

The Focus this week will be on the labor market, with initial jobless claims Thursday and October Unemployment due out Friday expected to show a new 26 year high unemployment rate of 9.9%. Payrolls fell by 175,000 last month, deepening the "Worst employment slump since the 1930's", according to Bloomberg News. Until we see significant progress in the US employment situation, the FED will likely continue in it's current monetary policy of near zero interest rates and qualitative easing, therefore the secular bear market in the US Dollar is likely to continue.

Look for opportunities to get short the US Dollar and long the Australian and or Canadian Dollars this week. Keep an eye on this report or contact us directly at 1-888-436-6033 for new recommendations!

Published on  Mon, Nov 2 2009, 08:51 GMT