With all eyes on US NFP’s at 13:30
pass on an observation from our colleague Andy Busch from Nesbitt Burns that
President Bush’s trip to Chicago today to talk about the economy
could be an indication that the number will print to the upside. The thinking
goes that Mr. Bush would not face a crowd unless he had good news to bring
them. While there is absolutely no proof
that that is indeed the case, and all of this conjecture may simply be idle
trader speculation, we’ve also noticed in the past that whenever Administration
officials make themselves available for early morning interviews on CNBC the NFP
numbers tend to be strong.
Assuming that the NFP’s do not disappoint, the more interesting question is will they have much impact on the currency market? With most players anticipating 200K, a number only slightly higher than consensus is unlikely to provide much fuel to dollar bulls. However, if the figure exceeded 300K. the effect on the currency market may be substantial, as traders would have to reassess their present thesis that the Fed is nearly finished hiking rates. At 300K or above, 5% Fed funds rates becomes a serious possibility and as a result EUR/USD may head back to below 1.2000 once again.