The most important random number of the month
The first genuine marquee event of 2014 awaits us this afternoon as everyone sits patiently waiting for the random number generator that is the NFP. Market consensus broadly is in the +197k vicinity while most (via Twitter as well as some of the larger banks) are calling 220k+. We’ll all be a little wiser in just a matter of hours. For what it’s worth my personal call is for +207k on the print and subsequently look for inherent volatility with a general lean on USD buying. Anything remotely strong or at the very least better than expectations will see the bulk of the market have their continued taper view reinforced and thus this will further serve to support the USD.
Overnight action was muted as all sat waiting for this afternoon. In the wake of an ECB meeting that gave us nothing other than more determined language from Mario with regard to forward guidance, after all was said and done the headline pair returned to levels vaguely seen in the 24 hours preceding the event.
UK Manufacturing data was flat this morning in the wake of +0.4% increase, with a plethora of trailing stops sub the 1.6450 area in the Cable the tumble was quick and one way. However bids joined the party into 1.6400 and it’s roughly around there that we’ve held ever since.
As far as levels on the day, similar guidelines as the last few days still hold validity. As we all know it’s safe to expect volatility into the print and at best you’re guessing which way the cookie will crumble, so perhaps trade after if you must, but certainly not before.
EURUSD: The bid at 1.3550 held steadfast yesterday all throughout the press conference and there are more buyers still seen into 1.3530. Below 1.3520 however, well that’s stop city. For what it’s worth should we see the pair sub the 1.3500 handle I become a more than willing buyer. On the topside offers still remain into 1.3625/30 and 1.3650.
GBPUSD: 1.6380 is the nearest line in the sand with stops residing sub bids into that level. On the topside sellers only join the party once again into 1.6480/90.
USDJPY: Outside of another mammoth 105 option expiry today, many are now calling for a 3 big figure retracement in the pair. I’m not ready to disagree at this stage. Note this is (for now) is not an endorsement of getting short the pair.
Helmets on and good luck out there today.