The Beginning of the End?

Fresh Non-Farm Payrolls numbers, and the huge surprise with the dropping unemployment rate suggest that maybe Obama was right: the beginning of the end of the global recession. Great volatility in forex trading leaves the dollar slightly stronger.

Drop in Unemployment Rate

Non-Farm Payrolls printed a serious surprise: job losses in the US squeezed to 247,000 instead of 320,000 that were expected. The change in job losses is especially significant in comparison to last month’s job losses, that were revised to 443K. They originally printed 467K.

The even bigger surprise was seen in the unemployment rate. President Barack Obama said that it’s likely to see an unemployment rate that is above 10%. Today, unemployment rate was expected to rise from 9.5% to 9.6%.

This didn’t happen. The unemployment rate fell! For the first time since May 2008, the rate of people that are “job-challenged” dropped. Despite being a small change, from 9.5% to 9.4%, this change is very serious, especially in the atmosphere it creates.

Barack Obama said yesterday that his administration’s action have helped the economy, slowing down the job loss rate. His words are backed today by the numbers. But we should be cautious: a one time surprise isn’t a trend. We’ve also seen how relatively good figures were later revised downwards…

Forex Trading

This big surprise made the forex markets go wild. Currencies went violently up and down. For example, EUR/USD traded between 1.4413 to 1.4272 around the release. Other pairs traded in a similar pattern.

After these junps, things are stabilizing. For the greenback, they’re stabilizing higher. At the time of writing, EUR/USD is trading below the ranges seen during the day. So are other currencies.

But the week isn’t over yet. The greenback could go even higher, erasing the falls that it suffered this week, or could go lower, in a “risk appetite behavior”. Will we see another “Friday effect” this week?

I’ll update this post later on…