Friday November 08, 2013 07:08
Eager traders entered the market immediately after the ECB announcement of lower rates, anticipating the continued monetary easing would prove price supportive. But in the details, they ignored that inflation was not an imminent threat for Europe and that ECB easing would be constructive for the $US/Euro cross. The markets, after having knee jerked on the headline, not the analysis, promptly reversed, handing traders who were first in line as much as a $30 loss within minutes. Added to the pandemonium was the release of third-quarter US GDP, which came in at 2.8% from an expected 2.3% consensus adding more fuel to the “weak” argument that Fed tapering will be in play for December. If we did not have US non-farm payrolls coming out this morning, I believe the markets would be in the low $1,290 range. A number north of 170,000 will continue to spin the taper record and pressure metals. A number south of 150,000 will take some of the edge of the ECB interest rate decrease, as the market discounts any Fed tightening before 2014.