After a long time of rising unemployment, today’s NFP data provided better news. For the first time in about two years unemployment rate unexpectedly fell to 10% in November as employers cut the smallest number of jobs since the recession began. This is an improvement from 10.2% a month ago, although other numbers suggest improvement to be marginal, if at all. For example, the economy shed 11,000 jobs last month. So, if jobs are still getting lost, how come overall unemployment figure is getting better? Couple of possibilities. One is that benefits ran out for many, and they no longer show on this statistic. Another one is influx of seasonal jobs, related to the holidays. However, even if improvement is temporary, it still exceeded expectations. Let’s just hope things don’t turn around next month.

Currencies had been very subdued in hours leading to NFP release, only to explode on the news. US Dollar gained significantly, as if in response to the wishfull thinking of our financial authorities, and others around the world. What I find most interesting in USD behavior today, is the fact that it moved strongly against JPY. Perhaps time has arrived that these two currencies have decoupled finally. If this is the case, we might see currencies reacting differently to news from now on. Not a sure thing yet, this situation must repeat again, before we can be more certain that a fundamental shift took place, but something to pay attention to going forward.

Another currency that had a great day was Canadian Dollar. It is the only one stronger than USD, although most of its gains had come before the employment numbers were released. Things have turned somewhat over last few hours, but CAD had a great day. Not a development I expected, with a NZD-CAD trade on the line.

This cross was discussed in a Hot topic  post. My intention was to buy it at 0.7630, which finally happened. Price stalled for some time, before moving reluctently up. Few hours ago it broke and took out my stop loss. I placed it 0.7589, under minor low established after trade had been initiated. Loss of 41 pips. But things got much better trading Swiss Franc.

I was looking for a buy in GBP-CHF, following yesterday’s break even trade. Price entered reversal zone, but it was difficult to commit myself until about an hour before London open, or maybe 30 minutes after a comment to the last post. Eventually entry happened at 1.6560. Target was under the resistance of 1.6700, which I set 1.6685, for 125 pips gain. Good trade. Since the price kept moving, I entered long again at 1.6710, but with much smaller objective. Price ran into 100 SMA, with another resistance level just above it. I closed it for additional 50 pips. had it not been very late in the week, I’d likely hold it for longer. This will be reviewed and possibly reentered after the weekend.

This chart shows the “calm before the storm”. USD-CHF has been building reversal pattern for couple of days, with ranges contracting to extremely tight area for several hours before NFP report. I was looking at a little bigger picture, with 1.0030 level of particular interest and a buy order there. Price moved much faster than expected and hit 70 pips target with ease, something I have not anticipated this rapidly. Most likely scenario was to close this trade at the market, when leaving for weekend. Nice trade, which turned otherwise flat week around to finish it on a positive note and in the black.

Mike K.