The New York session started the day off with the markets anticipating the employment data for October.  The market had been expecting Non-farm Payrolls to come in at +85k.  That number was blown away by nearly double expectations as we saw a print of +166k.  The markets initial reaction was to buy the dollar.  It did so aggressively as we saw EURUSD trade from the 1.4490 area down to the 1.4450 area in the blink of an eye.  USDJPY had the same reaction as the pair rallied from the 114.70 area up to test near 115.45. U.S. equity futures also rallied off this data and this caused them to rally initially.  This rally in the futures caused the fortunes of the dollar to turn as the market wanted to put the carry trade back on.  The dollar sold off against just about every currency with the exception of USDJPY.  We saw EURUSD turn on a dime and reverse course to trade up near the 1.4530 area. GBPUSD had a similar reaction as it traded from the 2.0785 area up to the 2.0870 area and beyond.  These moves caused the carry trades to rally sharply and we saw all the JPY crosses reverse course and make new highs for the day.  The carry trade continued to be dominated by equity moves through the remainder of the day with the bias to trade near the upper end of their ranges for the day.

With the better than expected jobs data out there it looks as if the U.S. has dodged another bullet with regards to the country heading into recession.  There are still the credit concerns and housing market issues lurking out there.  Those two factors could still put a damper on the overall economy.  The uncertainty over which direction the economy and markets are headed due to factors just mentioned will surely keep volatility at a premium. Expect the markets to remain fast and furious over the next month. Moves like these will continue to provide good opportunities for those who are able to focus on these markets.

Upcoming Economic Data Releases

  • 11/4 New Zealand Labor Cost All Wages for Q3 @ 21:45 GMT; Expectations 0.8% vs. prior 0.8%
  • 11/4 New Zealand Labor Cost Private Sector for Q3 @ 21:45 GMT; Expectations 0.8% vs. prior 0.7%
  • 11/4 BoJ Monetary Policy Meeting Minutes for September @ 23:50 GMT