For those who have been to Disney World, you are familiar with this ride. I like the name. It is descriptive for the wild ride the currency markets took on Super Friday, the nickname for the Non-Farm Payroll announcement on the first Friday of the month. There was a lot of movement, more so than I've seen in a long time.
The pound (Great British Pound - GBP), started losing ground to the US dollar prior to the announcement at 7:30 AM CDT. It continued to lose almost 80 pips (.8 cents) into the first couple minutes. This is kind of ironic because the announcement was very positive for the US dollar. There were a net total of 247,000 jobs lost last month, the fewest number in 15 months. This is a very strong economic report in the favor of the US dollar and an indicator to the talking heads that the recession may be cooling.
The pound then swung around and dropped 140+ pips (1.4 cents) in the next 15 minutes. It then reverted back up 130 pips in the next 20 minutes. It then began to drop again forming the last leg of an inverted W on a downward slope over the next 2 hours. It did another smaller inverted W later, but that is not unusual in the latter part of the trading day or week.
Why this is extremely unusual is not just because of the size of the W or the short time period, it is what the other currencies did. All the other currencies, the Euro, Swiss Franc, Japanese Yen, reacted as one would expect and lost ground significant ground (more than 200 pips, 2 cents) to the US dollar. It is the first time that I can remember that the pip interval for the day on all the other currencies is greater than the pound. That is extremely unusual.
My trading day did not go so well. I took a significant loss on the pound after the first reversal of 116 pips. The other 4 positive trades did not make up for the loss as I finished the day with a net pip loss of
-41 pips.
Thus, the week total also ended negative, the first time in a long time of
-53 pips. Because of the small size of the account for now, that resulted in a
-11.6% decrease for the week. I'll get it back next week. The new FIFO rules did not help at all with this result.
Speaking of the new rules, I finished opening the new account with
SummerstreetFX. Next week I will transfer money to the new account. This account is not affected by the FIFO rules by the way they do multiple bank feeds and assignments. It also includes the ability to hedge, which I use frequently in my trading style.
Here are the trading stats for Friday, August 7, 2009.
| Open | High | Low | Close | Pip Interval |
| GBP/USD | 1.6780 | 1.6830 | 1.6649 | 1.6691 | 181 |
| EUR/USD | 1.4345 | 1.4412 | 1.4153 | 1.4167 | 259 |
| USD/CHF | 1.0653 | 1.0842 | 1.0576 | 1.0822 | 266 |
| USD/JPY | 95.44 | 97.77 | 95.04 | 97.47 | 273 |
| GBP/JPY | 160.15 | 163.04 | 158.92 | 162.69 | 412 |
Again, it is wild that the other currencies moved more than the pound. This is very unusual, almost never. All the other currencies lost significant ground to the US dollar. Although there is usually more movement on Super Friday, it was much more than in Super Fridays for a long time.
What this means:All the talking heads on the financial networks will point to this day and say that we are turning the corner on the recession/depression. I find it interesting that President Barack Obama even commented on today's announcement.
"The worst may be behind us," President Barack Obama declared. "Today, we're pointed in the right direction."
This is clearly done for PR purposes, especially after the President's approval rating dropped to 50% this week, the lowest since he took office.
However, the unemployment rate is still 9.4%, only down a tenth from 9.5% last month. Still, the job market remains shaky. A quarter-million lost jobs are a far cry in one month from the employment growth needed to put the national economy on solid footing.
When the economy is healthy, employers need to add a net total of around 125,000 jobs a month just to keep the unemployment rate stable. Plus, to push the jobless rate down to a more normal 5 percent range, it would take much stronger growth -- at least 200,000 new jobs a month. Economists say it might take until 2013 to drive down the unemployment rate to 5 percent.
Also, the White House said the president still expects the rate to hit 10 percent this year. So do many economists and the Federal Reserve. We are not even close to being out of the woods. But, the president sure needed a PR boost.
I think there is a relation.
May the pips be with us!
The Pipmaster
Email: titangroupfx@gmail.com
