As markets wait on the US NFP data at 12.30 GMT here's a preview 6 May 2016
The monthly bun-fight that manifests itself as a data release is looming once again amidst the usual hype and bluster.
As I repeat time and time again I prefer to trade the fact not the hype and the crystal ball and runes have long been consigned to a landfill site. However that doesn't mean the release and the data itself aren't important as an indicator of economic health but will it change the time frame/thinking of Yellen & Co at the US Fed?
Answering a question just now to reader Questwatch I said:
" I don't think the Fed is so data-dependent right now Quest. A good number in line with above expectations will be welcome of course and there will be calls for hikes but I think there is a bigger agenda here with the global scenario and like it or not they have to respect that fragile picture"
That's my take on all this in a nutshell. We know that the global economy is experiencing wobbly times again with almost every country having its own particular elephant in the room ( eg China - economic slowdown, UK- slowdown, Brexit, Japan - continuing lack of growth/inflation, EZ - migration, low inflation not to mention the varying economic performances of member states, EM - inflation vs rapid slowdown of growth ) and that central banks the world over are being quick to lay the blame at any/all of the above.
Last time out Yellen voiced concerns from the FOMC that they are fully aware of what's happening elsewhere and that's having an impact on their decision making. Rightly in my view and an opinion I was voicing here for a long time when others were calling for rate hikes as early as 18 months+ ago.
So trade the number today as a plus or minus for the US economy, and buy or sell USD accordingly as you see fit, but don't assume that it's going to finally tip the FOMC over the top and hike again this month, next month or July. Other US data out lately has been less than convincing and soft readings today will add to the bears' conviction that there's only 1 hike on the cards for this year and no time soon.
There are bigger forces impacting here and for the conspiracy theorists there's a growing view that the last G7 meeting made deals behind closed doors that will retain the status quo for a while yet.
Trading the knee-jerk will bring short-term opportunity and that's all that many of us look for in our day-to-day trading outlook. As for the longer term we play in an ever-changing and ever-fickle whirlpool. Trying to second-guess the Fed or the bigger agenda will invariably end in frustration and not to be recommended.
Yellen - Looking but not necessarily listening
