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Friday’s miss on payrolls was not the worst of it. The nasty lower revisions for the headline job print in June and July (-74k) were not pretty. Initial reaction saw a deflated dollar, while emerging market currencies loved it – dollar BRL and MXN rallied +1%.

In truth, this August payroll report is one of the outliers among recent data reports showing a clear strengthening of activity in the US. However, the details are worrying enough to make the Fed doves more cautious on how tapering will proceed. Analysts not that even if the staunchest of doves, Chicago Fed Evans, stating that he can “be persuaded” about tapering beginning then odd favor tapering happening later this month.

The key to all of this will be the “size.” A poll of Fixed Income dealers found expectations centered on a $15B reduction in liquidity per-month. What would probably be more realistic would be a number closer to $5-10B. A token sum and an amount that would help the U.S. Treasury market to simmer down and get rid of some of that excess noise. Although not a true Fed consideration, a nominal amount that would bring some much needed relief to the Emerging Markets.

WEEK AHEAD

* CNY New Yuan Loans
* CNY Consumer Price Index
* NZD Reserve Bank of New Zealand Rate Decision
* AUD Employment Change
* AUD Unemployment Rate
* EUR ECB Publishes Monthly Report
* USD Advance Retail Sales
* USD U. of Michigan Confidence


Source: Week In FX Americas - Token Taper On Offer