The immediate reaction to NFP was higher sharply higher equity prices and lower bond prices following a beat of the consensus private sector reading by 21k. The corresponding yields on bonds moved higher relieving the short-term highly overbought nature of the Yen. The Yen is greater than 1% lower against all the majors except against the USD and CHF, the other two safe haven currencies. The commodity currencies led by Aussie and Kiwi were the second group to react to the stronger, but still mixed employment report.
US equity markets opened up by 1.08% this morning, but the reality that “we only lost 51k jobs“ last month may soon set in. My belief is that the expectations for a disaster jobs report where high and we are seeing short-covering in the interest rate and Yen markets. The reaction in the EURUSD has been extremely sluggish in terms of risk-on, which I believe is very telling of continued underlying weakness in the market psychology. The President is scheduled to speak , again, today and the markets are looking for specifics of what steps the government will take should the recovery rally begin to lose steam. Should the President disappoint on that end, risk aversion could come roaring back. Also, we have an ISM number at 10:00 AM EST today that markets will be watching.
The S&P 500 faces significant resistance from the .786 retracement at around 1110 as we currently trade 1103. I am watching a key level of resistance in the AUDJPY at 78.15-78.55 after re-working the AUDJPY wave count from yesterday. A failure of both levels will provide evidence that the short-covering efforts following a “ non-disaster “ are exhausted, and a return to the realities of our economic situation is approaching. Per the SOTD position tracker below, I have orders to sell AUDJPY at 78.15 and 78.45 with stop losses at 79.50
10:15 AM EST Following the a dismal Non-manufacturing ISM number and talk of indefinite cancelation of the president's speech, which he is now giving, AUDJPY moved sharply lower against the resistance zone. I am setting all of this noise aside, and will leave my sell orders as they are.
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