Dollar Reaction To NFP Going Forward: A Regional Debt Story May Unfold

After the mixed NFP numbers a regional forex story may now unfold, and economic GDP-to-Debt ratios will be relied upon to value a currency against the Usd going forward, meaning the forex market may lose some of the equity futures dominance through the last part of 2009. "After the initial moves it now looks as though things may need the U.S. session to find fair value," TheLFB Trade Team said. "The S&P Futures market may struggle to hold the gap higher from the NFP release, and that will empower the dollar until the cash market opens."

"Asian markets are closed, Europe is trading in its afternoon session, and by 11:00 EDT the volume will dry up. The major pairs reversed the moves higher after the release, in-line with S&P Futures reversing the gap higher, and at the same time that oil and gold reversed off the high of the day; creating a perfect storm for dollar buying. Whether it can hold through the Wall Street open is questionable; the U.S. jobless rate just hit 9.4%, and the economy just posted 342k lost jobs. That creates a coin flick on Friday dollar values," they said.

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