Wait For It!
Today is a Big Day in the markets. We will get the unemployment report from the U.S. There are rumblings in the market that the number will be weak, very weak. This is the natural market spin given the recent weakness we have seen in several economic releases in the U.S. recently. Let’s remember that unemployment is a lagging indicator, which means we could have a number that looks fine on the surface of things, but in reality the employment situation does not reflect the actual weakening of the U.S. economy. It would be reasonable to assume that employers, who have struggled to find enough people to hire the past few years, will be willing to hang on to workers longer, before making downsizing decisions. In addition there is some hiring starting to take place for the U.S. census that will take place in 2020. Today´s number will be important in the short term but we are focusing on trades that we think will work going into the year end:
Analyst expectation is around 130,000 for private payrolls and 145,00 for total Non-Farm, due to census hiring. This is the weakest estimate we have seen in 7 years. https://www.bloomberg.com/news/articles/2019-10-03/all-signs-point-to-soft-u-s-jobs-report-after-run-of-weak-data?srnd=markets-vp
We see a $55 to $65 in Brent Crude. Difficult to trade currently as battle between politics and growth.
Oil is currently testing the support line from January and August. A break opens for a test of $50.
Regarding FX, our friend Steen Jakobsen and his team at Saxo have published an interesting piece on the USD:
Unemployment Fridays can be volatile, with a great deal of short term movements that are just noise! Have your plan ready to execute and don’t get caught up in the short term panic!