Good Afternoon,

 Let’s review the data. Unemployment claims have been tracking between 350k and 400k – this is a weekly number that gives you guidance to the monthly unemployment report. The 350k-400k average is consistent with -200k to +200k jobs lost/created per month. What isn’t consistent is the ADP jobs data –they were expecting a higher number. Remember, ADP is not a government number and has only been on the economic calendar for a few years and has a horrible track record for predicting the actual government number.

So the headline number comes in well below expectations (thank you weekly claims for helping out with my personal forecasting) and the markets rally. See yesterday’s post for an article on markets rallying on poor economic news and rallying on positive economic news.  What you should be taking from this is that the markets are rallying because it keeps the Fed in play. Regardless of the Fed actually doing something isn’t the point. They probably have to, but that is beside the point. They can. That’s the point!

Moving to technicals, not much to say in the broad markets except, look for prices to continue. More specifically, yesterday I mentioned the USD/CAD. The USD/CAD was dropping, yet oil prices were sideways. Today, we got a pop (the dragging up) in oil prices that I expected and with that, a USD/CAD that broke the .9800 level. Oil prices are near the top of their range and if they break out could move towards the $100/bbl mark. As I said yesterday, I wasn’t going to touch a buy order in the USD/CAD as oil would eventually pop.

Past performance is not indicative of future results

Additionally, even though the VIX is dropping, trading ranges picked up as equities are now out of there range and moving more than a few points per day. This gave the EUR/USD an above average trading range and a BUFFALO BOUNCE

Past performance is not indicative of future results

This makes two BUFFALO BOUNCES this week as ranges picked up. I hope that we will see ranges like this in the future, but I can’t get too excited because we know what higher equity prices mean for the VIX and overall volatility and trading ranges.

Past performance is not indicative of future results

A look ahead to next week’s fundamentals: FOMC, retail sales and the usual “international speaker series”.

See you next Wednesday for the IBFX Webinar – as always, I will talk about inter-market relationships and trading psychology in addition to the main subject – creating trading plans with the correct risk to reward ratios.

Happy Trading and Be Environmentally Cool

Coach Brian

Forex trading is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot afford to lose.