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明早8:30，紧张S了。
The action in the foreign exchange market heats over the next 24 hours with the ECB monetary policy decision and the U.S. non-farm payrolls report due within an hour of each other. Individually, either of these event risks could set the tone for trading for an entire month, and collectively, they could be a double whammy for the currency market. At the last ECB meeting in June, the central bank unveiled a relatively conservative covered bond purchase program and for this meeting, the market will be looking for signs of whether the program will be extended. In terms of Non-Farm Payrolls, the big question is whether last month’s sharp improvement can be sustained. Only 345k jobs were lost in the month of May, compared to -504k the prior month. The good thing is that there should be a lot of leeway for the payrolls report because a dip is natural after such a large rebound. In fact, the currency market’s reaction to the ADP number this morning could be symbolic of how the dollar could trade after the payrolls report. When the payroll provider reported that -473k people fell off of corporate payrolls, the dollar soared on risk aversion flows but it quickly reversed after traders realized that as long as job losses are less than 500k, it still represents a material improvement from January 2009 levels. If job losses exceed 500k however, it could resurrect the risk of a double dip recession.
Let’s take a look at each of these events separately to get a sense of what to expect.
ECB Preview: Which Way Will the ECB Lean?
There is no question that the European Central Bank will keep interest unchanged at a record low of 1.00 percent. Therefore the focus will be on the press conference delivered by Trichet, which begins at 8:30am ET. The reaction in the EUR/USD will depend upon which way Trichet leans. Will he talk about an exit strategy or will he leave the door open for further easing? From an economic perspective, the Eurozone economy remains weak but certain sectors of the economy has been improving. Businesses and consumers have grown more confident which is the first step towards any type of recovery. German retail sales also increased for the third straight month in May. However there is plenty of weakness all around. The unemployment rate is still rising as manufacturing and service activity continues to contract, albeit at a slower pace. The ECB just reduced their growth forecasts last month and unfortunately the region is not expected to return to positive growth until next year. With German consumer prices rising only 0.1 percent on annualized basis in June, inflation is also negligible. Therefore the ECB will most likely say that the risks to inflation are balanced but commodity prices leave the risk to the upside.
We will also be watching for Trichet’s comments on the results of the first ever 12 month refinancing operation which pumped a record amount of money into the financial system. The operation was a great success in that it successfully pushed rates lower and therefore the ECB will most likely coast on that for a while because in their eyes, they have done all that is necessary for the time being. We expect Trichet to reiterate that monetary policy is appropriate, leaving all options open. Last week, ECB member Weber, who also heads up Germany’s Bundesbank said the central bank has used up its room to cut interest rates which is probably true, but Trichet may not go so far as to repeat that. Also, since the ECB just started its quasi Quantitative / Credit easing program last month and economic data has been mixed, we expect the central bank to still be considering increasing rather than decreasing monetary stimulus. If the market believes that Trichet has reserved the option to increase their asset purchases, the EUR/USD could give back its recent gains. If he openly talks about extending the size and scope of program, it would be bearish for the EUR/USD but if Trichet suggests that he has done enough, which we expect him to do, the EUR/USD could extend its gains. Of course, how the market trades at 8:30am ET tomorrow morning will also largely depend upon the U.S. non-farm payrolls report.
Non-Farm Payrolls Preview: Will Payrolls Follow 1980s Trajectory?
Last month’s non-farm payrolls report elicited smiles across Wall Street when traders learned that 345k jobs were lost, far less than the market’s 520k forecast. Although the unemployment rate breached 9% for the first time since 1983, hitting a 25 year high of 9.4 percent, it signaled that the labor market has hit a bottom. Tomorrow’s non-farm payrolls report will be critical in confirming whether the hemorrhaging is over or if the improvement was only a one month fluke. Based upon our leading indicators for non-farm payrolls, we believe that job losses accelerated last month but only marginally. There has been a lot of good news including the Challenger layoff report which showed the first decline in layoffs since February 2008 and the rise in the employment component of manufacturing ISM. But it is natural to see a dip after last month’s sharp improvement especially since the closing of GM and Chrysler plants will add approximately 40k-50k people to the unemployment rolls. Our forecast is for payrolls to fall between 375k and 450k.
Non-Farm Payrolls Follows 1980s Trajectory
According to the following chart, the latest trend of non-farm payrolls is incredibly similar to that of the 1980s (X axis: 1 equals the first month of job losses). Back then, the economy returned to consistently positive job growth 20 months after the first month of job losses. In the current recession, the job losses began in January 2008 and even though we are still months from experiencing positive job growth, January 2009 will go down in history as the month with the single highest job losses during the 2008 Great Recession. However with that in mind, we could still see job losses take another nosedive on its way back towards positive territory.
So what makes us believe that non-farm payrolls will only see a mild decline?
Every month, we take a look at ten leading indicators for non-farm payrolls. Forecasting non-farm payrolls this month is more difficult than previous months because service sector ISM is not being released until after the employment report. Of the reports that we do have, 6 out of the 9 point to smaller job losses and 2 out of the 3 that favor larger job losses only saw a mild deterioration.
Arguments for Better Non-Farm Payrolls:
1. Employment Component of Manufacturing Sector ISM Rose from 34.3 to 40.7
2. Challenger Reports First Decline in Layoffs Since February 2008
3. ADP Reports Fewest Private Sector Job Losses Since October 2008
4. University of Michigan Consumer Confidence Matches 18 Month High
5. Continuing Claims Off Lows
6. Zero Strike Activity
Arguments for Weaker Non-Farm Payrolls:
1. Monster.com Employment Index Falls One Point
2. 4-Week Average Jobless Rises Marginally
3. Conference Board Consumer Confidence Dips from 54.8 to 49.30
ADP - Over the past few years, the ADP report has a history of undershooting non-farm payrolls and so the marginal improvement actually confirms our belief that payrolls was worse and not better last month.
How to Trade the Non-Farm Payrolls Report
For currency traders, the most important question is, how will the dollar respond? Over the past 3 months, the U.S. dollar has weakened materially, but the weakness is actually a reflection of investor optimism. We believe that the level to watch is -500k. If non-farm payrolls fall more than 500k, the dollar could sell-off initially but then quickly regain footing as risk aversion flows set in. If non-farm payrolls fall by less than 450k, the dollar could initially rally but then give back its gains as risk appetite improves. Anything in between could lead to erratic trading. Non-farm payrolls are a notoriously volatile piece of data to trade as revisions and expectations also impact the market’s reaction. Traders should also remember that the first reaction to the non-farm payrolls report is usually not the real one that lasts for the rest of the trading day. Six out of the last six times non-farm payrolls were released, the knee jerk reaction was quickly erased. Even though the direction associated with these instances has not always been the same, we can see that the immediate reaction is not sustained, and eventually reversed into a more substantial move that lasted for the course of the trading day. |
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狗仔卡
发表于 2009-7-1 12:27 PM
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发表于 2009-7-1 12:35 PM
