Long USD/JPY (5-6 Oct), Comment on US labor report, N.Korea, etc
Real-Time AmpGFX – stopped in USD/JPY on NK and Japan earthquake news (Fri 10/6/2017 9:13 AM MDT)
I was stopped out (so far at the low)
News on NKorea is that it may be preparing to test a missile as soon as this weekend capable of reaching the US West Coast.
And then there was an earthquake reported in Fukushima. (latest news that there is no tsunami threat, so this one may have been the knife in my back).
Reports that Trump said on Thursday night, at a gathering of military leaders that “This may be the calm before the storm.”
Rumours that Trump is thinking of firing Sec of State Tillerson.
I am not inclined to jump back in, its too hard to assess the impact on these items
Staying with NZD and AUD shorts, these may be more immune to NK risk, although they too have rebounded from lows.
AmpGFX – trimmed USD/JPY and orders, further comment (Fri 10/6/2017 8:39 AM MDT)
Sold half unit USD/JPY at 113.34, to reduce position size to one unit.
Positions
Short half unit NZD/USD at 0.7158; s/l 0.7157; t/p 0.6915 (s/l changed, t/p added)
Long one unit USD/JPY; s/l 112.73; t/p 114.30 (s/l raised, t/p added)
Short half unit AUD/USD at 0.7790; s/l 7827; 0.7640 (s/l changed, t/p added)
Comment
I have trimmed USD/JPY, worried about potential NKorea events and keeping risk under control. As I update, here USD/JPY appears to have fallen on renewed NK fears… Not sure exactly what yet.
The Market analysis is that the wages data were goosed by strong utility wages (overtime and such). It remains the case that wages were revised up in August.
Also, I hear less reason why the hurricane might have caused the unemployment rate to fall to 4.2%. The under-employment rate also fell further, and the participation rate was much stronger. So the tone of data still appears to be quite strong.
Real-Time AmpGFX – Comment on payrolls (Fri 10/6/2017 6:42 AM MDT)
The wage growth number was significantly higher than expected, up 2.9%y/y in Sep, above 2.5% expected, and it was revised up in Aug from 2.5%to 2.7%y/y. This is a new cyclical high.
The unemployment rate fell to 4.2%, below 4.4% expected.
Presumably, these two figures would have been less affected by the hurricanes.
The headline payrolls fell 33K, below +80K expected. The Aug data were revised up 10K to 169K
US 2yr yields are up 2.7bp this morning and 10-year yields are up 3.4% (about 2bp if this is since the payrolls at the front and back end of the curve).
This still seems like a pretty muted reaction to this data.
Real-Time AmpGFX – Bought USD/JPY to add to long (Fri 10/6/2017 6:33 AM MDT)
Bought one unit of USD/JPY at 113.08 on US labor report
Real-Time AmpGFX – Bought USD/JPY (Thu 10/5/2017 10:15 AM MDT)
Bought half unit of USD/JPY at 112.77
US yields have moved to recent highs and should support the USD.
House of Reps in Congress pass a budget resolution, a step on the way to tax reform. Helping keep the momentum towards tax reform (even though there is a long way to go).
The latest polling in Japan places Abe’s LDP well in the lead.
Recent data shows strength in the US.
Fed’s Williams supported the current FOMC forecasts for gradual rate rises.
Senate confirms the appointment of Quarles to Fed Governor, a supporter of rolling back financial regulation.
I think the market is less likely to respond to a weak US labor report, and I see risk biased towards a stronger outcome, including upward revisions to August, based on strong leading indicators before the hurricanes.
Positions
Short half unit NZD/USD at 0.7158; s/l 0.7258
Long half unit USD/JPY at 112.77; s/l 111.93