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Commentary: Traders close out positions against North American job reports
00:00, 06 December 2013
The release of US nonfarm payrolls sparked a quick flurry of trading activity but those moves have been quickly unwound. This suggests that the results and their impact on tapering while good but were not a big enough surprise beyond what markets had already priced in through this week’s trading. The headline numbers for the US remained positive with nonfarm payrolls up by over 200K for the second month in a row with only a small revision to last month. The unemployment rate provided a positive surprise falling to its lowest level in five years at 7.0%. This brings it within striking distance of 6.5% which the Fed has previously outlined as a threshold where it could start to tighten monetary policy. Initially, this news caused USD and US indices to jump while knocking down gold and other major paper currencies like EUR. This flurry of activity has since subsided a bit. The loonie has stabilized against the USD. Although Canadian jobs grew more than expected, they were pretty much all part-time jobs which don’t carry as much weight as full-time. While the job numbers may keep tapering speculation running high through to the Dec 18 FOMC announcement and statement, for today, traders seem to be using the release as an opportunity to take profits and cover short positions. Next week still looks to be active for trading with the focus shifting to data from China and Japan. Corporate News Bank of Nova Scotia $1.31 vs street $1.32 Economic News Significant economic announcements released yesterday afternoon and overnight include: US nonfarm payrolls 203K vs street 185K, previous revised down to 200K from 204K US private payrolls 196K vs street 180K previous revised up t0 214K from 212K US unemployment rate 7.0% vs street 7.2% vs previous 7.3% Canada jobs change 21K vs street 12K Canada full-time jobs 1K vs previous 16K Canada part-time jobs 20K vs previous (2K) Canada unemployment rate 6.9% as expected US personal income (0.1%) vs street 0.3% US personal spending 0.3% vs street 0.2% US PCE core inflation 1.1% as expected UK Halifax house prices 7.7% vs street 7.3% UK BoE/GfK inflation forecast 3.6% vs previous 3.2% Germany factory orders 1.9% vs street 4.1% Economic reports due later today include: TBA weekend China trade balance street $21.5B 6:50 pm EST Sun Japan GDP street 1.6% vs previous 1.9% 8:30 pm EST Sun China consumer prices street 3.1% 8:30 pm EST Sun China producer prices street (1.5%)