1 Minute Market Rundown – 8th August 2022

Huge NFP Numbers
Stocks Claw Back Losses
USD to Remain Bid?
Crypto Holding In

Safe to say the NFP print on Friday caught the entire market off guard. It was the second strongest jobs report of 2022 and points to both consequential demand and supply factors.

Honestly, every part of that report was just mammoth. The headline number came in more than twice higher than expected at over 500k, labour supply was down, wage growth higher and unemployment rate lower. I find it tough to see how a FED that is now data dependent and has abandoned forward guidance is not emboldened to hike another 75bps come September.

With the FED now seemingly needing to hike rates to balance strong labour demand with still tight labour supply, it is tough to think anything other than the USD should be higher. Whilst immediately in the aftermath of the data release we saw equities sell off, the USD bought and yields higher the reverse has happened since. I can only assume the reason for the reversal is the market perhaps starting to believe in a soft landing and thus risk bounced. However, this author needs to be long USD for now. The cleanest plays, in my mind, are EUR/USD and USD/JPY. I have sold a little EUR/USD here and will look to add around 1.0230/40. The other position the desk has is long USD/CAD. Canada’s payrolls number was not as strong as their neighbours and the pair sits near short term support. Long USD/CAD with a 1.2870 stop on the day offers good risk/reward.

In crypto, markets continue to remain resilient. Was interesting to see that despite the huge print on Friday, crypto barely looked lower. There were some positive developments in the space which is helping markets including Brevan Howard completing the largest ever crypto fund launch, raising $1bn and BlackRock partnering up with Coinbase. News like this warms my soul as it shows traditional finance firms continue their push into crypto despite the volatility we have all had to endure. Ethereum continues to outperform BTC and is approaching initial resistance at 1750/1800 a break above which could well see the pairt target 2100. BTC remains in its range and does need to get back above $25,200 if things are to get exciting again.

Good luck all.

Lux Thiagarajah – Head of Markets

1 Minute Market Rundown – 8th August 2022

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