Non-Farm Payrolls Better than Expected but Still Paint a Very Bleak Outlook

The dollar surged against the majors following better than expected payroll data. The EurUsd dropped nearly 200pips to the low range of 1.35, while the UsdJpy fell 100pips finding support near 90. The GbpUsd is flat, trading very closely to its previous close, mostly due in part to the market digesting recent changes in monetary policy. Equity markets are lower in the US and Europe, with the Dow off 1.27% or 100pts and the SPX down 1.58% or 14pts. Bond buyers were back in the market purchasing was heavy in 2yrs driving rates in 6bps at the portion of the curve. Commodities were mixed with oil below $40 at $39bbl and gold higher by 1.23% at $867oz.

The Eurozone surprised the market with better than expected retail sales at 0.6% vs. 0.0%. But this data point was not enough to support the Euro, as dollar the dollar built strong momentum after Non‐Farm Payrolls announcement. The Euro sunk over 200pips as some Analysts expected the drop in NFP to be as high as 700k. NFP data came in at a surprising ‐524k, which was followed by a disappointing unemployment reading of 7.2%. Traders should take one very critical point from today's events, and that is the idea of financial Armageddon being priced into the market. The risk aversion trade reemerged in today's session but is unlikely to last allowing the Euro to move into recovery mode in the near‐term. Going long the EurUsd at these levels could be solid way to position yourself for a short‐term rally at the early part of next week, Traders who are moving in and out of the market can take advantage of the volatility.