For a long time now we’ve been hearing about recovery, sometimes referred to as “jobless recovery“. Recently, however, this has been replaced with positive expectation for job market. Especially authorities claimed that data indicated probable bottoming out of employment market, and we should expected some job creation to happen soon. Come to think of that, it has not been just recently, this has been a common theme through 2009. Every single month, maybe even a week, we were told that bottom was very close. Guess what, it still isn’t here.

December data shows that economy lost additional 85,000 positions, with unemployment holding steady at 10%. What’s worse, numbers indicated sharp drop in workforce, by 661,000 people. Which means that more of the jobless are giving up on their search for work. Once people stop looking for jobs, they are no longer counted among the unemployed. Here is the big picture- Employers cut 4.2 million jobs in 2009. And the unemployment rate averaged 9.3 %. That compares with an average of 5.8 % in 2008 and 4.6 % in 2007. Nearly 15.3 million people are unemployed, an increase of 3.9 million during 2009. It doesn’t look pretty.

Clearly expectations for this NFP report  were different. One can only look at the reaction of markets on the news. Big swings. For some time now, currencies have not been really responding to it. Small moves, with not much happening. What a change today- Dollar pairs put a strong show, with USD loosing ground across the board. But it wasn’t straight forward. We had gaps, whips and spiking spreads. That’s why I don’t trade these events, too unpredictable. It is bad enough that my mechanical systems get trashed on day like today. No reason to throw more good money after bad.

Trade in EUR-GBP from last post. Entry was at 0.8977 with 40 pips target and it happened as intended. Existing support at 0.8920 held, perhaps too well for my purposes. Rebound was very sharp, even went through the 100 SMA, which I thought would hold. Current level at 0.8990 is not a bad re-entry for a sell, it has a very small and encouraging stop, but not before the weekend. I want to see how it opens, any gap would give clues about most immediate direction. For now I’m tentatively considering another short under 100 SMA, and under the support of 0.8920. Will decide after the open.

Follow up on more ideas from last post, including the Loonie. For a while things looked good, GBP-CAD made a nice move, after I got in at 1.6537. But things went sour for the Pound soon, and it showed in all its crosses. I salvaged 46 pips this trade, due to luck, and this was the only redeeming quality it had. I still will be looking for long entry here, but need to see more price development, preferably with more promising set up.

The other Loonie pair was EUR-CAD. Initially it made a new low, on Euro’s weakness, which enabled me to lower the entry. Then EUR started to turn, about the same time previous trade came to a conclusion, so I decided to sit on this one for longer. Unfortunately, it didn’t make any progress and those few extra hours only netted 2-3 additional pips. Might return to this pair next week.  Not the best of trades. If it wasn’t for the fact that I wanted to continue on the theme started earlier in the week, they wouldn’t even be mentioned here now. Market behavior didn’t fit into my vision of things, but that’s just the way things are when trading- we, as traders, must adjust to how they change. Over all, first week of the year turned out to be positive, even if nothing came easy.

Mike K.