Friday, April 06, 2007
Time to put it all on black and spin the wheel. Yes, it's payroll day again today, with the added kicker that there is zero liquidity in those few markets that remain open. A usually noisy (as opposed to signal-y) event will likely be even noisier today, and traders could do worse than to hit the golf course today and worry about the consequences of the report on Monday.
For those that retain an interest, however, some interesting gaps are emerging. Yesterday saw a poor performance from the US bond market, with the future sliding back below 108. Yet higher yields provided little succor the the dollar, as EUR/USD traded up to its highest level since the spring of 2005.
Recent correlations suggest that this combination may not be durable, and one of the two (either US bonds or the dollar) will snap back after payrolls. For choice, Macro man would favour the dollar, as it has seemed to trade well on each of the last several payroll days. Yet that strength has proved ephemeral, as current weakness of the buck against everything but the yen would attest.
If today's payroll figure is as profitable as yesterday's BOE non-hike, Macro Man will be more than satisfied.