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FX Day Trading - 09 January 2012
Dollar higher on US employment data
Non-farm payrolls up by 200k in December
Unemployment down to 8.3%
Prime Minister David Cameron monopolises the headlines this morning. He doesn't like shadow chancellor Ed Balls. He doesn't like the "crony capitalism" that rewards company directors irrespective of performance.
He doesn't like Nicolas Sarkozy's financial transaction tax. Nor does he like the idea of Alex Salmond setting the agenda for Scotland's independence referendum; the PM insists it must happen within 18 months.
If it does, Scotland could have its own currency even before Greece or Italy. As for what that currency would be, there are no clues as yet. It will not be the pound and the euro has no chance; if the Scots want to break a 300-year-old monetary union with London they will not be wanting to walk straight into a new one with Brussels.
With that freedom, Scotland will be the envy of most of southern Europe. Austerity is no more popular this year than it was last. Neither is it doing anything to solve the immediate problems in Euroland.
Alistair Darling, the former chancellor, said on Sky News that EU leaders' failure to tackle the imbalance between rich and poor Eurozone countries was an "unmitigated disaster" and that the austerity-über-alles strategy amounted to a "suicide pact".
Friday's Euroland ecostats offered nothing to contradict Mr Darling's pessimism. Consumer and economic confidence were lower, retail sales fell by -2.5% on the year, unemployment was steady at 10.3% and German factory orders were -4.3% down.
The numbers weighed on the euro but did it no lasting damage. EUR/GBP starts today unchanged from Friday's opening level.
They are both lower against the US dollar though. The monthly American employment report showed non-farm payrolls rising by 200k in December and unemployment down from 8.7% to 8.5%.
It was the 15th consecutive monthly increase and brings to 2.6 million the total net hirings in 2010-11.
There had been concern that, at an average monthly pace of 137k, the increase in employment was barely enough to match population growth but the falling unemployment rate appears to demolish that theory.
Online spread betting investors reacted positively to the US employment news and, for once, that did not mean selling the dollar in favour of riskier FX spread trading currencies. They bought the dollar, extending the morning's gains by half a cent.
It all ran out of steam as London wrapped up for the weekend but the dollar is still a good half cent firmer on the day.
There is nothing of any consequence on today's agenda. Australia has already reported an improved but still weak construction sector purchasing managers' index; it went up by half a point to 41.0.
Australian retail sales were flat in November.
Swiss unemployment rose from 3.1% to 3.3% and Germany's trade surplus widened to €15.1bn.
Yet to come are Swiss retail sales, Euroland investor confidence, German industrial production and Canadian building permits.
As for non-statistical event risk, Angela Merkel and Nicolas Sarkozy will meet to discuss strategy and UniCredit's €7.5bn fully-underwritten rights issue goes on sale.
Barring disasters (and with miracles in short supply at the moment) it could be a less than exciting day.
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'FX Spread Trading: US Dollar Rallies on Strong Employment Data', Article by Moneycorp, last update: 9-Jan-12
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