Saxo Bank | Jul 10, 2014 07:11AM ET
FOMC Minutes
The market was only looking for hawkish surprises as it is virtually impossible to surprise on the dovish side of things in FOMC-land. There was mention in the minutes of finishing the third quarter off with a USD15 billion/month reduction of purchases at the October meeting rather than leaving a USD 5 billion/month remainder for the following meeting. There was some concern expressed on financial stability as well (see ZeroHedge passing along Hilsenrath comments ) – I am somewhat surprised that the market didn’t pay more attention to this, but perhaps the lack of a feeling that the FOMC is prepared to do anything besides “note their concern” is the reason that the June 2015 Fed Funds futures is trading a few ticks higher as the minutes were more thoroughly analysed last night.
Takeaway: Market taking it as a bit dovish, but I can’ imagine this has bigger implications for now. Let’s look for more reaction potential from next week’s (Tuesday and Wednesday) Yellen testimony before Congress.
Australian employment report
The headline payrolls number beat expectations slightly and AUD spiked higher on this news, but the internals of the payrolls change was less positive as virtually all of the growth was in part time positions. Worse yet, the unemployment rate pulled back higher to the cycle high at 6 percent rather than remaining steady at 5.9 percent. Optimists can say that this is due to a higher participation rate as more people return to the labor force – but let’s see what the coming months bring. For now, this was a net AUD negative. Takeaway: This puts a cap on AUD for now and bears might get a bit more aggressive on the other side of this data, particularly if risk appetite is shaky – looking toward the 0.9320 support. EURAUD also a bit interesting – see charts below. AUDUSD
AUDUSD very much in focus after the employment figures overnight – if we close here or lower today, we have a classic bearish reversal after the last few days of creeping higher from the important 0.9320 support, which is the next trigger for a test of the 0.9200 lows and possibly beyond.
Economic Data Highlights
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