G3 Recap 4-21-11

Main Items:

  • US Initial Jobless Claims declined to 403k last week vs 390k expected and 412k previously
  • US Philly Fed dropped to 18.5 for April vs 36.9 expected and 43.4 previously. The New Orders index dropped sharply to 29.2 vs 60.1 previously, while Employment increased to 37.7 vs 20.7. There appears to be some seasonal distortions, given the multi-decade high print last month and the unexpected sharp drop this month.
  • FHFA House Price index declined 1.6% in Feb vs -0.3% expected.

Overseas:

  • German IFO Business Climate Index declined to 110.4 in April vs 110.5 expected and 111.1 previously
  • Australia NAB Business Confidence improved to 11 in 1Q vs 5 previously

Commentary:

  • Booking profits on $JPY:
    On 4/4 I proposed shorting USDJPY. It was a couple days early, but for those who held on, it is now time to book profits. Technical conditions suggest a rebound soon, and front end rates in the US appear to be stabilizing. With equities higher and the end of QE approaching, the next move is probably higher.

    Depending on the trend in data surprises, it will probably be time to sell start selling USDJPY puts in the near future.

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