NFP came in weak, as expected. On the release, $GC1! spiked, $DX1! dove and $ES1! tanked. Again, all par for expectations. That said, no sooner than 6 minutes after the release, $DX1! was already trading higher than pre-NFP. Could that be a signal of capitulation on the bearish
dollar trade? Yes, that's a gutsy call and yes, I'm a bias - I'm short $GC1! and long $DX1!, but could it be? The market clearly punted at the opportunity to sell the dollar lower. A super-strong NFP wouldn't signal a dramatic tightening of labor market "slack." In an environment of dramatically tightening labor markets, we should expect to see NFP print lower and lower as the pool of job seekers dries up and employers' demand for new labor balances with higher worker costs. We've seen wage inflation
creep higher, despite output and productivity declines. Could we be sitting at NAIRU? I think we have been for some time. We'll get to see what the smart money thinks later today in the CFTC data.
In the meantime, USDOLLAR
is currently testing 1st order bearish trend
resistance at 11850. Watch for a move higher towards 11920 for confirmation on the technicals,