US ADP - Flat Print market just hiccups

Today on March 7th 2012 at 13:15 GMT (8:15 EST) the ADP figures were released from the USA. These figures are said to be a leading indicator for Friday highly anticipated NFP release. Not sure however how accurate it is at forecasting the NFP, regardless if it has a big enough deviation from expectations the market will rally. Today it was flat however and the market just did a little hiccup and then continued.

The market is awaiting the NFP on Friday and also the ECB will announce their latest Interest Rate decision tomorrow along with Mario Draghi's Press Conference. To top it off the deadline for the Greek PSI Bond Swap Deal is 8pm GMT on Thursday and the market has been reacting to headlines about the % of PSI voluntary participation in the deal. If the level is not high enough there maybe CAC (collective action clauses) invoked on those who do not accept the deal and this could trigger some CDS (Credit Default Swaps)...the whole maneuver appears specifically to be designed to get around the legal phrasing of the CDS so Greece can do some sort of orderly default without crumbling the whole house of cards which all these derivatives have built up. One thing triggering another and on and on.

Here is the data:

US ADP
Estimates -> Median: +215k Average: +211k Low: +120k High: +270k
Actual: +216k Prior: +170k Revised: +173k

About a 15 minutes later 2 smaller reports were released, these normally don't get much attention:


US Nonfarm Productivity
Estimates -> Median: +0.8% Average: +0.9% Low: +0.5% High: +1.6%
Actual: +0.9% Prior: +0.7% No Revision

US Unit Labor Costs
Estimates -> Median: +1.2% Average: +1.4% Low: +0.7% High: +2.8%
Actual: +2.8% Prior: +1.2% No Revision

Here is the 15 second chart of the EMini S&P 500 Future:

This is the 15 second chart of the DAX

Just to be complete here are the 1 minute charts of the USDJPY and CADJPY forex pairs, they usually are quite good at following the movement Stock Indices. You can see they just wiggled a bit when the data was released. However the Yen Crosses have been rallying hard over the past 2 weeks but took a break and retraced during the 1st half of this week. This move was due as they were quite overbought. They seemed to get some attention in and have started to bounce off these retracement levels.

German Factory Orders Lower - DAX Sells off

This morning of March 7th at 11:00 GMT (6:00 EST) the Factory Orders were released from Germany. This is not one I ordinarily watch, but there was a really nice deviation on it today and I am usually trading the DAX during the day, so really liked the move and thought I should mention it here.

Here is the data:

Germany Factory Orders YoY (nsa)
Estimates- Median: -1.7% Average: -1.6% Low Estimate: -3.2% High Estimate: +0.4%
Actual: -4.9% Prior: 0.0% No Revision

Germany Factory Orders MoM (sa)
Estimates- Median: +0.6% Average: +0.6% Low Estimate: -1.8% High Estimate: +2.1%
Actual: -2.7% Prior: +1.7% Revised: +1.6%

This is the 15 second chart of the DAX Future Contract which shows the move lower on this bad print.

This 1 minute chart of the DAX shows more of the price action after the release it continued to sell off for awhile.

Here is the 1 minute chart of the EURUSD, although the pair had already sold off a bit ahead of the news, the news certainly did not help as the pair has been selling off alot this week. Still the DAX was the preferred instrument to trade.

US ISM Non-Manufacturing PMI - Small Deviation Higher

This Afternoon at 15:00 GMT (10:00 EST) on Monday March 5th the ISM non-Manufacturing figures were released from the USA. Last week's Manufacturing PMI figures were actually quite lower on Thursday at 52.4 versus 54.5 expected which lead to sell off. These PMI figures have been coming out quite good from the USA in the past few months and have received alot of attention from the market who are all watching for signs of a recovery from the US.

Last month this figure was release in the aftermath of the NFP data and was a very good print, adding extra fuel to the already quite large rally that came on the back of the better NFP data. However this indicator in month's prior has caused whipsaw on smaller deviations and thus it is always best to wait for a good sized deviation of somewhere between +/-2.5 to 3.0 to get into a trade. Today's print was better but the only a +1.3 deviation.

Here is the data:

US ISM Non-Manufacturing PMI
Estimates- Median: 56.0 Average: 56.2 Low Estimate: 54.0 High Estimate: 59.0
Actual: 57.3 Prior: 56.8 No Revision

US Factory Orders
Estimates- Median: -1.5% Average: -1.5% Low Estimate: -3.0% High Estimate: +0.5%
Actual: -1.0% Prior: +1.1% No Revision

The Stock Indices have been best to trade on US data. Personally I watch the Futures, but an ETF or CFD are also options. Here is the 15 second chart of the EMini S&P 500 Future Contract, at the bottom is the Volume. There was a whipsaw initially which did work up higher in agreement with the deviation but it gave way to a further sell-off.

The DAX future has alot bigger moves than the EMini which is actually quite a sluggish instrument to trade unless there is some big news pushing it around. The whippyness was thus even worse on the DAX after this release, however it too followed the EMini up for some gains given enough wiggle room. This is a 15 second chart of the DAX Future.

However these gains were short lived and the drop was much more steep in the DAX than what was seen on the EMini. Here is the 1 minute chart of the DAX.

If you are stuck to forex then the CADJPY usually is quite well correlated to the Stock Indices. Here the CADJPY makes about 20 pips before falling over as again the major Indices did. Here is the 1 minute chart of the CADJPY forex pair:

This 1 minute chart of the USDJPY chart shows the pair lift about 15 pips. Just a few months ago we could not be sure the USDJPY would react reliably to US news, but in the past couple of weeks the pair has woken up from its hibernation and has found renewed upward momentum. A bit overbought now and probably due for a correction, but in the longer term we could see further gains in the pair up to 85.00 initially. Anyhow all this focus and attention in the market is getting more traders interested in the pair and thus it is in play and reacting better to news.

US NonFarm Payroll - Much Higher Risk-On except for European Currencies and Gold

This Friday, February 3rd 2012 at 8:30 EST (13:30 GMT) the montly payroll data from the USA was released. This is basically an indication of the Employment Situation and is the most well known and widely watched piece of economic data known to the market. Almost every market instrument will move based on this data. If there are jobs in the USA then there will be confidence and Americans will have money in the pockets to buy stuff...whether houses from the large stock available or things fabricated in China.

Earlier in the week on Wednesday the ADP data came out slightly lower. This is a smaller sample but it gives an advanced indication of what is likely to happen with the NonFarm Payroll Number.
There are other economic data figures which attempt to gauge the employment situation in the USA. The weekly Initial Jobless Claims for instance has been coming out below 400k since December 2011. This broke the low seen in February 2011 and the number has been consistently at around 360k now. The Challenger Job Cuts was higher however, which indicates more people were laid-off from their jobs. The Employment Component of ISM Manufacturing PMI was also slightly lower, but Consumer Confidence definately has been up. Anyhow despite all these advanced readings on the day there is little you can do to predict what the NonFarm Payroll number will be unless you have special connections or something. This time there was an upward surprise. Here is the data:

US Change in Nonfarm Payrolls
Estimates- Median: +140k Average: +146k Range: +95k to +225k
Actual: +243k Prior: +200k Revised: +203k

US Change in Private Payrolls
Estimates- Median: +160k Average: +162k Range: +110k to +250k
Actual: +257k Prior: +212k Revised: +220k

US Change in Manufacturing Payrolls
Estimates- Median: +12k Average: +14k Range: +9k to +25k
Actual: +50k Prior: +23k Revised: +32k

Unemployment Rates
Estimates- Median: +8.5% Average: +8.5% Range: +8.3% to +8.7%
Actual: +8.3% Prior: +8.5% No Revision

Average Hourly Earning MOM All Emp
Estimates- Median: +0.2% Average: +0.2% Range: 0.0% to +0.3%
Actual: +0.2% Prior: +0.2% Revised: +0.1%

Average Hourly Earning YOY All Emp
Estimates- Median: +1.9% Average: +1.9% Range: +1.8% to +2.0%
Actual: +1.9% Prior: +2.1% No Revision

Average Weekly Hours All Employees
Estimates- Median: 34.4 Average: 34.4 Range: 34.3 to 34.5
Actual: 34.5 Prior: 34.4 Revised: 34.5

Change in Household Employment w/Pop
Actual: 847 Prior: 176 No Revision

Underemployment Rate
Actual: 15.1% Prior: 15.2% No Revision

So where to start. Of course there were some nice moves, however while the commodity currencies forex pairs rallied the european currencies sold off. Gold sold off while Crude rallied. We will start with the Stock Index Futures, these are actually the most reliable to trade on US news in general these days. Here is the 1 minute chart of the Emini S&P 500 Future and the DAX Future:

After the Stock Index futures the CADJPY or another Commodity Currency like Australian dollar or New Zealand versus the Japanese Yen, AUDJPY or NZDJPY. Here is the 10 second chart of the CADJPY:

and this is the 1 minute chart of the CADJPY to show more of the move:

It is always good to keep an eye on the USDJPY, although the moves are not always so many pips. Here is the 10 second chart of the USDJPY:

and a 1 minute chart of the USDJPY to show more of the move:

So now a 30 second chart of the EURUSD will show how it moved down on the release. It did briefly run up about 30 pips but then dropped 120 pips:

In contrast to the AUDUSD which spiked up, pulled back, and kepted rallying. The GBPUSD, USDCHF, USDNOK followed the Euro by weakening against the Dollar, only the Swedish Krona escaped the sell-off in European Currencies. The NZDUSD, USDCAD, USDZAR and Asian Currencies all rallied against the US Dollar much like this Australian Dollar did in this 1 minute chart of AUDUSD:

Also here is the 1 minute chart of Gold. It was whippy initially, basically it lost some of its shine as a safe-haven when better employment in the USA meant risk appetite. Interesting to note shifting correlations, Crude Oil did rally in contrast:

US ISM Manufacturing - slightly off estimates but still not bad

Today on Wednesday 1st of February at 10:00 EST (15:00 GMT) the ISM Manufacturing PMI figures were released from the USA. There came out slightly below estimates but still quite high, especially in comparison to Europes figures which were released earlier, although Europe is recovering a bit for the much worse PMI figures a few months ago. Anyway the negative deviation was no where near where we would get interested in selling.

Here are the figures:

US ISM Manufacturing
Estimates- Median: 54.5 Average: 54.4 Range: 53.0 to 56.0
Actual: 54.1 Prior: 53.9 No Revision

US ISM Prices Paid
Estimates- Median: 50.0 Average: 50.2 Range: 48.0 to 53.0
Actual: 55.5 Prior: 47.5 No Revision

The Session was risk on in general. The better Eurozone PMIs and hope that a deal on the Greek PSI would be coming soon lifted risk appetite. So although this was slightly off it still was pretty good considering everything and the risk-on move continued. First is the S&P 500 EMini Futures 1 minute chart. Despite an initial wiggle or whipsaw it did resolve higher:

Here is the 1 minute chart of the DAX Future which moves in tandem with the US indices on US news.....usually:

The CADJPY did continue up some 30 pips, taking its time...here is the 5 minute chart of CADJPY:

The USDJPY stayed most flat until it hit a lumpy bid about 2 hours later, still the cross remains under pressure despite the fake trendline break before the FOMC last week. Here is the 5 minute chart of the USDJPY:

German Unemployment - Leaked Perhaps but good follow thru

This morning at 3:55 EST (8:55 GMT) the Unemployment data from Germany was released. It was a better print and with last night's agreement of Eurozone members at their latest meeting and also reports of a increased take-up by european banks of the next LTRO, the markets have been risk on.

Here is the data:

Germany Unemployment Change
Estimates- Median: -10k Average: -9k Range: -30k to +10k
Actual: -34k Prior: -22k Revised: -25k
Germany Unemployment Rates (s.a)
Estimates- Median: 6.8% Average: 6.8% Range: 6.6% to 6.9%
Actual: 6.7% Prior: 6.8% No Revision

The German DAX stock index had been selling off during the beginning of the european session, while the commodity currencies were rallying and the EURUSD and GBPUSD where holding near their swing highs for the overnight asian session.

Here is a 1 minute chart of the DAX, notice how it started rallying 3 minutes before the actual release:

Next is the 10 second chart of the EURUSD, the pair took out its swing highs from the Asian Session just below the 1.3200 round figure handle, making a swing low heading into 8:55 gmt:

Also the 5 minute chart of the EURUSD to show a bit more perspective of the overnight move leading into the European session:

US GDP Advanced for Q4 2011 - High Expectations slight disappointment but good moves

This friday January 27th 2012 at 8:30 EST (13:30 GMT) the Advanced or 1st reading of GDP for Q4 2011 was released from the USA. The expectations for this were quite high, considering that the Final Reading for Q3 was +1.8%, to jump to +3.0% is nearly doubling growth. As the expectation was quite high some probably considered that a small miss of the expectation would not cause a major sell off, but in the end it did provide a decent move down, although later on in the session things rebounded and there was a rally into the close for the week. Alot of these was do to good headlines about a deal on the deal with PSI about a haircut on Greek Debt, that an agreement was close.

Anyway here is the data:

US GDP QoQ (Annualized) Advanced Q4 2011
Estimates- Median: +3.0% Average: +3.0% Range: +2.4% to +4.5%
Actual: +2.8% Prior: +1.8% No Revision
US GDP Price Index
Estimates- Median: +1.9% Average: +1.7% Range: +0.6% to +2.6%
Actual: +0.4% Prior: +2.6% No Revision
US Core PCE QoQ
Estimates- Median: +0.9% Average: +1.1% Range: +0.8% to +2.4%
Actual: +1.1% Prior: +2.1% No Revision
US Personal Consumption
Estimates- Median: +2.4% Average: +2.4% Range: +1.2% to +3.6%
Actual: +2.0% Prior: +1.7% No Revision

Here are some charts then, first is the Emini S&P 500 Future 1 minute chart:

Also another option for stock index futures is the DAX, or the FTSE, any major index will move with the EMini and DOW on US news. I like the DAX:

In Forex the CADJPY follows the Stock Indices quite well. Any Commodity Currency (AUD,NZD,CAD...or even ZAR or NOK probably will have to review those charts) versus the Japanese Yen will generally follow the stock indices, sometimes Canadian News comes out at the same time as US News so you have to watch out for that. This is the 10 second chart of the CADJPY:

Last month the USDJPY did not follow the lower print and actually moved up (only a small amount of pips). This time it did follow everything down, but normally this pair is avoided since it really doesn't move that much most of the time. Here is the 30 second chart of the USDJPY forex pair:

Actually it was risk-off across the board the USD dollar rallied as well with AUDUSD, NZDUSD, GBPUSD and EURUSD selling off. Although the JPY did appreciate more than the USD on this risk-off move as can be seen by the USDJPY chart above. Here are 2 more charts of AUDUSD and NZDUSD, this time 5 minute chart and you can see more price action. Later on in the US Session as mentioned the deal on PSI haircuts looked close also 90 minutes after GDP the University of Michigan Consumer Sentiment figures were released at 10:00 EST (15:00 GMT). This data has rebounded nicely since some bad prints during August 2011. Now the figure is coming back up to 2 year highs. Here is that data:

US U. of Michigan Confidence
Estimates- Median: 74.0 Average: 74.3 Range: 72.5 to 76.0
Actual: 75.0 Prior: 74.0 No Revision

Finally these 2 charts are GMT+2 and also the Green line at the top is the R1 pivot, which AUDUSD tagged perfectly and sold off from, while NZDUSD overshot a bit. The Red Arrow is the release of GDP while the Blue Arrow is the release of U. of Michigan Confidence. The NZDUSD found support right on the Yellow horizontal line which is the Daily Central pivot:

US GDP Final for Q3 2011 - lower GDP but Initial Jobless Claims lower which is good

Today at 8:30 EST 13:30 GMT the GDP figures for the USA came out. This is the final reading for the 3rd quarter of 2011 and thus are a bit dated. These came along with the weekly jobless figures which last week broke the critical 400k bull/bear line and printed 366k coming back down to the April lows, which is where things were before fears of a double dip grew during the summer of 2011. There was also personal consumption and pce core, the fed's perfered inflation indicator.

It is rare for there to be such a range of estimates for a final release of GDP but after the Advanced of 2nd reading of Q3 back in November where the figure came out at 2.0% below the 2.5% expected, the range of analysts estimates grew quite wide...wider in fact than last month's estimates which had a 0.9 range this month had a 1.3 range.

The IJC did come in slightly lower this week than last week, not alot but it is positive that it maintained the lower reading from last week into this one. The GDP was -0.2 deviation below the median estimate of all analysts surveyed by bloomberg and the risky assets did sell off. Here the figures:



US GDP QoQ Annualized - Final Q3 2011
Estimates: Median +2.0%, Average +2.0%, Range +1.5% to +2.8% (majority +1.8% to +2.2%)
Actual: +1.8% Prior: +2.0% No Revision


US Personal Consumption
Estimates: Median +2.3% Average +2.2% Range +1.5% to +2.4% (majority +2.2% to +2.4%)
Actual: +1.7% Prior: +2.3% No Revision

US GDP Price Index
Estimates: Median +2.5% Average +2.5% Range +2.0% to +2.5% (majority +2.5)
Actual: +2.6% Prior: +2.5% No Revision

US Core PCE q/q
Estimates: Median +2.0% Average: +2.0% Range +2.0% to +2.0%
Actual: +2.1% Prior: +2.0% No Revision

US Initial Jobless Claims w/w
Estimates: Median +380k Average: +378k Range +355k to +400k
Actual: +364k Prior: +366k Revised: +368k

US Continuing Claims w/w
EStimates: Median +3600k Average +3602k Range +3560k to +3650k
Actual: +3546k Prior: +3603k Revised: +3625k

Now for some charts...what was interesting is looking at last months reaction to the -0.5 deviation lower from +2.5 expected to the +2.0 of the actual release. Normally there would have been a good move lower on the Japanese Yen crosses but instead we saw broad US Dollar strength on risk aversion. I know it might not make sense that the US Dollar would strengthen on bad data from the USA but when markets get bad data they respond by dumping riskier high yeild assets and buying safe US bonds...it is the largest safest market in the world, but they don't yeild so much. First chart is the Australian Dollar versus US Dollar AUDUSD 10 second chart:

next is the CADJPY, which has a high correlation to stock indices...last month the US GDP was released with Canadian Retail Sales at the same time, which was higher while GDP was lower, so it was not a good pair to trade last month, this month it was good:

Nice to look at the DAX chart, this is the index for the German stock market, but it moves nicely on US news as well. This is the 1 minute chart:

should include the Emini S&P 500 to be complete..1 minute chart:

and finally the USDJPY is included because this was the safest pair to trade on US news, this is because you cannot always be sure that risk-on will mean selling US Dollars and risk-off will be buying US Dollars...sometimes risk-on is selling the Japanese yen and risk-off is buying the yen. if there is good US data it should mean that the US currency should strengthen but because of the risk-on/off dynamic it is not always the case. Because the yen is alot like the US dollar in the case it is sometimes good to trade this pair as you go negative the US dollar on bad data and you go positive the japanese yen on risk aversion. The market right now is more slanted towards buying US dollars on bad news and risk aversion or risk-off than buying japanese yen, this is not always the case as many bad GDP releases in the past this pair has sold off. Here is the chart today which shows this didn't work today...