Ralph Shell @ 2:30 PM, Friday March 05 2010
Earlier this week Presidential Economic Adviser cited the winter storms as a reason for lowered expectations in today's employment and Non-Farm Payroll reports. When the non-farm number came in with a loss of only 36,000 jobs, and the national unemployment rate remained unchanged at 9.7%, both the equity and the currency markets responded positively. The administration lauded the report, and the recovery bulls expressed optimism that the job data signaled the economy had turned the corner.
People see what they want, and what they are told to see. A more detailed explanation reveals some conflicting data. The average work week slipped from 33.9 to 33.8 hours, and the underemployed rate when up from 16.5% to 16.8%. The underemployed rate includes those who are working part time in a professionally non related job and want full time work. The number of part time workers did increase from 8.3 to 8.8 million, a constructive sign as part time jobs often lead to full time as business grows.
The US government will be hiring 1.15 million people during the first half of 2010 to take the census, so this should help the employment numbers going forward through June. With the estimated population about 310 million, this means each census taker will have to count only 270 people. Granted there are numerous supervisory people who are not on the front line counting, but finding and counting only 270 people over several weeks or months does not sound like a very daunting task.
This past Monday we started the week the dollar firm against the euro and the pound. Initially comments by the Euro Central Banker Trichet against IMF involvement in Greece, unnerved the euro market. Later in the week, after the successful placement €5B 10 year bonds, the pressure on the euro should have abated. Greece did buy some time, but the rate on the bonds was 6.3%. Problems still exist as David Goldman in Seeking Alpha points out. In today's in an article entitled Greek Math he says:
"Greek bonds today traded at around 6.3%. With a total float of $402
billion, Greece’s annual debt service bill would be $26 billion if the
whole debt were financed at this yield. That’s a bit over $6,500 a year
in annual debt service for Greeks who actually have a job (4.95 million
workforce minus the 20 percent unemployed), or about 20% of per capital
income of $32,500."
With refinancing of maturing Greek debt between now and May estimated to be in excess of €15B, the Greek debt marathon will continue. The euro did manage a quick 300 pip rally from the low of 1.3434, but has since retreated back to the 1.36 handle.
The pound was clobbered in early week trade on results of a new poll which showed gains by the Labor Party might result in a hung parliament unable to address the budget issues. As we move toward the close today, the pound, trading at 1.5138 is making a nice comeback. The weekly chart looks like a hanging man doji. Going back a few years, one of the techniques of Rich Dennis and the turtles was to sell the market that behaved poorly and buy the one that was closing strong, especially on a Friday. Friday closing prices via the old print media would go out to the world, and traders would react to Friday's closing prices on Monday. On this theory we suggest selling the euro and buying the pound. This pair did get up to .9147 on Monday but has since been retreating, currently down to
.8990. The daily RSI at 89 is still in the sky, so a fall to the 88 handle is a possibility.
Author: Ralph Shell - ForexRazor Analyst - Graduated from a small Ohio liberal arts college. Graduate studies in economics and history at Duke University. Ten years experience trading cash commodities in domestic and export markets. Former commodity analyst with Merrill Lynch in Chicago. Member of and floor trader at the Chicago Board of Trade for 18 years.