No Expectations, No Disappointments – NFP Separates Currencies
Posted on March 5, 2010 by Yohay
Filed Under Other Forex Stuff | 9 Comments
As mentioned in my NFP previews, the low expectations were in favor of the dollar, but not all against all currencies – Euro, Pound, Swissy and Yen weaken, while the Aussie and loonie beat the dollar. This NFP is different:
Non-Farm Payrolls came out a little bit better than expected: they showed a loss of 36,000 jobs, better than about 50,000 that was expected. Last month’s number was revised to a loss of 26,000, an insignificant change from the loss of 20,000 initially reported.
A small positive surprise was also seen in the Unemployment Rate which remained at 9.7% and didn’t rise back up to 9.8% as expected. Let’s see the reaction:
Forex reaction – Pound going under 1.50
EUR/USD fell from 1.3580 to 1.3530 after the release. This 50 pips instant drop is a good reflection of the slightly better results. The most important support line for EUR/USD is 1.3423, and that’s still far away. EUR/USD recovered afterwards, but remained lower than
GBP/USD is also vulnerable to good American figures and it fell from 1.5040 to 1.4995, just below the round psychological number of 1.50. The important bottom line for the Pound is at 1.4780. This is a historic support line and also this week’s bottom – GBP/USD bounced off this line after the big collapse. GBP/USD recovered later.
USD/CHF and USD/JPY are on the rise – the US dollar gains ground against these majors. But the picture is different in the commodity currencies:
AUD/USD rises from 0.9010 to 0.9060, getting ready to attack the 0.90 resistance line that it failed to breach earlier this week.
Also the Canadian dollar is beating the US dollar – USD/CAD fell from 1.0320 to 1.0270. It went as low as 1.0269 earlier this week, and the most important support line is at 1.02 – the 2009 low.
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I wouldn’t call what’s happening in Japan “deflation”. How could that be when they recklessly INflate all the time since two decades? This “fear of deflation” is just a ruse by central banks to keep inflating the money supply. Deflation does not keep people from spending – they always spend what’s necessary. And money NOT “spent” is then saved which means it is credit to someone who invests it for capital goods etc. thus it is again being spent, only not for consumption. Money never lies completely idle to any extent whether there’s inflation, deflation, stability or a solar eclipse. For deflation to seriously happen, not only the current extreme credit expansion by the central banks and states (through “quantitative easing”, stimulus packages, monetising and then spending national debt etc.) but also the money that was released into the economy PRIOR to the collapse would have to be “mopped up” again. This is nowhere to be seen nor would it be technically possible (confiscation aside) so we will rather see inflation than deflation.
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