The Only Thing That Matters On Friday…
For Friday, only one thing matters: the payroll data.Â
For some time now the inverse relationship between the direction of the EUR/USD
and the “actual†payroll number has been spot on. Expect today to show little
deviation from that relationship. However, with large “speculative†positions
in the EUR/USD, we will need to see a sub 100K number in order to initiate longs
with the hope of 1.2925-35 being breached. Conversely, a number at least 75K
more than the expected +175K in terms of growth is needed for us to take a
bearish EUR/USD view. The graph below highlights this relationship perfectly.
Source:Â 4Cast
So, for now, we wait. We are
less clear on the reaction to out open positions with regards to the payroll
data. Given that our three open positions clearly show our unwillingness to get
too involved in the dollar based pairs still, we expect the reaction will be
less sharp in the event of a significant “away from consensus†number.
Long:Â AUD/NZD
Short:Â AUD/CAD & EUR/AUD
As always, feel free to send me
your comments and questions.