Last few days have seen increased talk about recovery. Many people claim that the recession is over, or just about, pointing to this or that economic indicator as a proof of that. Not sure how they feel today, after new unemployment figures were revealed. Some 570,000 new unemployment benefits claims were filed, more than was an estimate. It doesn’t look good. On Friday, the government will report the unemployment rate for August. Economists expect it to tick up to 9.5 percent, from 9.4 percent in July, and that a net total of 225,000 jobs were lost in August, down from 247,000 jobs lost in July.

These latest figures might be revised a little bit by the time announcement is made tomorrow, but not by much. What is important, is the fact that economy continues to loose jobs at a brisk pace. We can’t talk about any recovery until net jobs are created. Sure, some numbers can look good, even GDP can have some increase, but it is not sustainable. Consumer spending accounts for about 70% total economic activity, so it is critical to growth. However, as long as pool of workers continues to shrink, it is not reasonable to expect spending to increase. I know that a plenty of people spend more than they make, just like our government, so in theory we could have a recovery without labor increase. That would be short lived and a script for disaster, something that helped us get into current mess to begin with. With close to 10% unemployment rate, any talk of recovery is premature at best.

GBP-JPY has signs of its own recovery, after the large drop last few weeks. Just like general economy, these signs are not conclusive yet, rather small and fairly slow swings  up.  I was trying to catch an upside breakout, after price formed a base, or congestion zone straddling 150.00 level. It came today, even though the move doesn’t have much conviction and is slow by the standard of this pair. My entry order was set at 150.68. It was filled just before European opening.

I was hoping to see more decisive price acceleration, but at least the move was in the desired direction. Frankly, I expected objective of 152.00 to be met by now. Move came short although will probably be reached later on today. Since I won’t be able to monitor markets for next few hours, decision was made to close most of this trade just minutes ago and pocket about 80 pips. Residual position is small and can stay for now.

It could be an interesting day tomorrow. NFP numbers are due to be released. I’m sure there will be some surprises. Market reaction will be as always uncertain, but perhaps even more so tomorrow. Over last few months, this economic indicator had been creating more and more volatility.  But tomorrow, with Labor Day weekend ahead, interest in trading just might not be there. Who knows? I will go back to GBP-CHF analysis. This pair has had an interesting week so far and it will be time for an update.

Mike K.