Whipsaw action indicative of whipsaw sentiment

There’s a reason the charts look choppy right now, there has been a lot of mixed data in the latter part of this week. 

With the IMF changing its projection for global writedowns by 15% the market had a little moment of excitement.  If the IMF is willing to decrease the amount of money it expects to have to lend financial institutions it is, effectively, saying that it has increased confidence that banks around the world will be capable of enough capital growth on their own to cover toxic assets still on the books.  The IMF is clearly acting on a larger believe that there are signs of economic improvement across the globe.

With the market grasping at any news it can to invest again, we saw some steady investment almost across the board with the market selling USD to buy CAD, GBP and EUR.

Sadly, all good news was negated as the US headed into its Non-Farm Payroll Report and had dismal numbers to show for their efforts.  The market expected an improved number this month.  While still expecting jobless numbers to be in the negative, it was to be “better bad news” with numbers forecast at -175K improved from the previous month’s -216K.  Only to be stunned by a reported -263K Friday morning. 

After the initial, typical reaction to any news that deems the market place risky, we experienced sudden USD strength as those positions were closed out and US Dollars were re-purchased.

However, by the end of today’s trading the market has made some minor corrections to those impulsive moves and may give us some good consolidation areas to trade off of next week. 

Additionally, forecasts for news early next week (EUR:  PMI and Retail sales and GBP: PMI and Industrial Production) are looking stable to positive across the board, which could lead to further price correction after Friday’s reactionary moves.

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