A strong US jobs report is making waves around the world this morning:
Bloomberg: U.S. companies added 288,000 workers to payrolls in April and the unemployment rate fell to 5.6 percent. Economists had expected payrolls would rise by 170,000, according to a Bloomberg News survey. Jobs were added in manufacturing, construction and temporary help services.
The increase follows a revised gain of 337,000 jobs in March that was larger than estimated last month, the Labor Department reported in Washington. Manufacturers added jobs for a third straight month.
Bonds reacted quickly. The last bar on this weekly chart was largely drawn in the first 5 minutes after the report was released. Higher rates ahead, its clear from the reaction in the bond community that they believe rates are going up faster than the Fed's measured announcement might suggest.
The domino effect continues. Currencies react. EURUSD and USDJPY register strong moves and a strengthening USD.
USD gains over 1.4% against the JPY on the news:
This of course has the expected effect on certain commodities, notably Gold:
We identified the test of top in the Gold contract in early April and advised that it was time to leave the dreaded yellow metal alone. Since then Gold sector has been the worst performing sector in the market by a wide margin:
Moral of the story: when a test of top plays out in the big picture like this, assume that a top is in and trade accordingly. We can (and did in this case) attempt to start a long just under the test in the event that Gold pushed higher after a minor retracement. When that failed to materialize, it was our sign to exit stage left.
Learning where to sell is far more important than learning where to buy.
We will have more analysis as the day progresses. Equity indexes have sold off pre-market on the news - its going to be a little tricky this morning once stock traders get into the fray. Have a good day! /Mike
04.05.07 09:13 #