USD bares its teeth

This Daily Digest will cover:

• 🇺🇸 USD bares its teeth
• 💼 Tier 2 employment data strong
• 👀 Expectations for NFP rise
• 📊 Is the market missing something?

Yesterday was all about the USD rallying as yields moved higher and US stocks suffered as both ADP and weekly jobless claims beat expectations.

Euro is back at 1.0500 and GBP below 1.19, whilst USD/JPY leads the charge testing its key 134.50 region.

Attention turns squarely to the Non Farm Payrolls data at 1.30 today and you can forget the 200k predicted officially. Expectations have ratcheted up a notch and I suspect we need closer to 250 plus to satisfy the mood of the market. It is hard to see how it can disappoint after yesterday’s usually decent indicators, so the question will become can the markets react to the number still? For me, it will need to be a monster beat to really fuel the move from these levels, I am simply not convinced there is the appetite to hugely extend from here unless the pressure on the FOMC is too much to ignore.

Interestingly I sit here musing that the market might just be missing something. The FOMC has been talking about a soft landing for sometime. The market views this as some sort of pipe dream (myself included) but the data we have coming out is inflation dipping, jobs market remaining strong despite tech sector layoffs and energy prices cooling. These are the ingredients of a soft landing/mild recession. Something to bear in mind…

Stock markets outside the US have had a decent start to the year and I have a sneaky feeling that should this number come out 210-240 risk could have an old fashioned 3-4% relief rally.

I would dearly love to write something interesting about Crypto markets but they remain asleep at the wheel. We are caught in a standoff between long term holders who won’t sell and a lack of fresh buyers willing to put money to work. This leaves the Altcoins as the only real volatility and in this environment they become even more of a coin toss than normal.

Good luck as always!