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Forex: Stocks, Yen Crosses, AUDUSD at Risk of Collapse on NFPs

Forex: Stocks, Yen Crosses, AUDUSD at Risk of Collapse on NFPs

2013-09-06 03:08:00
John Kicklighter, Chief Strategist
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Talking Points:

  • With only two-weeks left before the September FOMC meeting, August NFPs are critical Taper cue
  • The basic formula for market reaction: steady or strong data boosts Taper risk and spurs risk aversion
  • While there are many trade options for this event risk, I prefer AUDUSD, AUDJPY and GBPUSD

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In recent months, the US nonfarm payrolls (NFP) report has generated greater volatility for the markets. With less than two weeks before the Fed has to decide Taper, this release is key. And, the response from the markets will likely reflect that. There are many nuances to the data and how far the markets have come to pricing in the Taper, but the potential in risk trends necessitates a simple equation to interpret this meaningful event. Stable or strong jobs numbers reinforce a September Taper which in turn undermines the hold out risk-assets built on leverage (equities, carry, etc) and leads to a market-wide risk move. In today's video, we discuss this formula, what the alternative scenario would look like and my top trade setups.

Expect breakouts? Use the DailyFX Breakout 2 strategy to signal or confirm setups!

Find out what event risk can threaten the trade setups discussed in today's video with the DailyFX Economic Calendar.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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