Friday, August 04, 2006

US Nonfarm Payrolls

Nonfarm payrolls rose 113k against an expected 144k from most analyst's. Revivsions to last month were slightly higher 124k against 121k. I believe that the July payroll data will support the FED's view of a slowing growth and inflation outlook. Therefore I maintain my view that the FED is likely to keep policy unchanged when the FOMC meets next week. This is not to say that the FED will signal an end to rate rises but rather a pause to allow the economy to digest the tightening already in the system. The dollar got hit hard on the back of this number and U.S. dollar futures rallied. I feel that the dollar will remain under pressure specifically against Europe and the U.K. Those countries as evident yesterday are still in rate rise environments and the interest rate differentials should begin to move in their favors, hurting the dollar. This number should also help Emerging Market currencies. Usd/Mxn and Usd/Brl specifically look like there is some downside in front of them.

Currenctly I am:

Short Usd/Brl
Short Usd/Ars
Short Usd/Clp

And looking for lower rates in



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