Wakeup Call: It's All About Jobs Today

Daily Forex Fundamentals | Written by Saxo Bank | Jan 08 10 08:14 GMT |

We are bullish on the payroll number coming out later this afternoon, our estimate lands at 35K vs. consensus of 0K Calendar Economic Data Releases Country Time (GMT) Name Saxo Consensus Prior GE 11:00 Industrial Production MoM (NOV) 1.0% -1.8% US 13:30 Nonfarm Payrolls / Unemploy. Rate (DEC) 35K / 10.1% 0K / 10.0% -11K / 10.0% US 15:00 Wholesale Inventories MoM (NOV) -0.3% 0.3% What's going on? The Fed released a statement yesterday stressing the need for better risk management at depository institutions. This can basically be viewed as a warning to banks that rates will not be kept at low levels forever. Nonfarm Payrolls are out today and we expect a very strong number. However, this has a lot to do with seasonal adjustments. The Unemployment Rate is seen slightly higher, but the risk is mostly to the downside due to the participation rate and aforementioned adjustments due to seasonality. The consensus of expectations in US Wholesale Inventories suggests that inventories will not lead Q4 GDP to the extent touted in the media. Watch out for NO Industrial Production at 09:00, UK PPI at 09:30, EC GDP (we and the market expect no change in this final estimate) at 10:00, and CA Unemployment at 12:00. Early macro numbers today have the potential for disappointment so we buy on dips into the Payrolls report. FX FX Daily stance Comment EURUSD 0/+ Continues to look supported by 200 day MA, look to buy dips down to 1.4260. USDJPY 0 Reversal in bullish sentiment seeing USDJPY sold down, prefer to stay on sidelines until upward momentum is re-established. EURJPY 0 Similarly, looking for a bottom to establish around 133.00 again before looking to go long. GBPUSD 0/+ Tight range fluctuating around 1.5950 expected to persist. Look to go long break of 1.5970 on upside. AUDUSD 0/+ Slight risk aversion ahead of payrolls data pushing a low of 0.9120. Buy dips down to 0.9120 looking for upside to 0.9200. Equities Equities Daily stance Comment DAX 0/+ Buy on dips towards 6028 targeting 6048. S/L below 6018. FTSE 0/+ Buy on dips towards 5536 targeting 5551. S/L below 5530. S&P500 0/+ Buy on dips towards 1139 targeting 1143. S/L below 1137. NASDAQ100 0/+ DJIA 0/+ Futures Commodities Daily Stance Comment Gold 0/- Sell at around 1122 targeting 1118. S/L above 1124. Silver 0/+ Buy at the break of 18.16 targeting 18.22. S/L below 18.11 Oil (CLG0) 0/+ Buy at the break of 82.70 targeting 83.40. S/L below 82.40 FX Options FX-Options Comment EURUSD Market still seems long gamma and this will keep spot ranges intact until the nonfarm numbers. Vols should find support should spot take another dive. USDJPY Vols are largely unchanged in Asia. With spot above 9300 we are seeing new wave of interest in buying the risk reversals (Buy USD puts) as ATM vols remain soft. AUDUSD Vols steadily lower in Asia except for front end gamma which continues to see good bids for both upside and downside strikes. Saxo Bank Analysis Disclosure & Disclaimer Saxo Bank A/S shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by Saxo Bank that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades in accordance with the recommendations in an analysis, especially leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses as well as profits, in particular if the conditions mentioned in the analysis do not occur as anticipated. Saxo Bank utilizes financial information providers and information from such providers may form the basis for an analysis. Saxo Bank accepts no responsibility for the accuracy or completeness of any information herein contained. Any recommendations and other comments in Saxo Bank's analysis derive from objective fundamental macro economical and company specific calculations, statistical and technical analysis, and subjective general market assessment. If an analysis contains recommendations to buy or sell a specific financial instrument, such recommendation should be seen as Saxo Bank's opinion that the specific instrument will respectively outperform the relevant market or underperform compared to the market. Saxo Bank's recommendations should statistically correspond to an even distribution between buy and sell recommendations. The recommendations may expire promptly due to market volatility and in general, Saxo Bank does not anticipate its recommendations to be valid more than one month. An analysis will be updated if and only if a market development or other issues relevant to the analysis render a new analysis on the same topic relevant. Saxo Bank's analysis does not cover any specific financial product over time but only products which Saxo Bank's strategy team finds it important to cover at any given point in time. In order to prevent conflicts of interest, Saxo Bank has established appropriate business procedures, incl. procedures applicable to research and analysis to ensure objective research reports. Saxo Bank's research reports have not been discussed with the parties, e.g. issuers of securities, mentioned in the analysis. Saxo Bank is under supervision by the Danish Financial Supervisory Authority. Saxo Bank does not engage in corporate finance activities and accordingly, Saxo Bank's employees, incl. the persons responsible for an analysis, do not receive remuneration associated with investment banking transactions.