The payroll numbers

So the Payrolls numbers were better than expected, weren’t they? I’m not sure if traders knew what to think (me included) and last week’s action has had more to do with position squaring than fresh views.

The headline payroll release of 524,000 sacked workers was close to consensus, but in reality much better than feared by the market. But, but, but the payrolls numbers warrant further investigation. For example:
* Revisions to the two previous months add a further 145,000 to the jobless total, which is more than 1 million for the past two months alone.
* The unemployment rate came out at 7.2%, higher than the forecast 7%.
* Manufacturing lost 149,000 jobs this month compared to a forecast 100,000.

Irregardless, traders weren’t sure what to make of it all; an early rally in equities petered out as did a dollar sell-off. More recent trade has seen the Dollar strengthen, even against the now-mighty Sterling. And equities have slipped a bit.

My trading last week was as muddled as the market reaction and ended on a slightly sour note. I’d bought GBPUSD in a fiver at $1.5187 and made just short of £200 by the time I’d stopped out the following morning.

But after the US data I made peanuts on a long GBPUSD trade, lost £90 on a short GBPEUR trade (yep, how could I lose money on that?) and lost £36 on a short EURUSD trade (again, how could I lose money on that today?).

The reasons for my losses were the reasons why I shouldn’t have dealt in the first place. I was indecisive in jumpy, volatile markets. And because they were so jumpy I traded with tight stop losses, which were invariably hit just before the market went where I’d hoped for. I still need to suppress the instinct to get stuck in, when occasionally it makes more sense to watch from the touchline.

My EURUSD trade was frustrating, but thankfully only in a token £1. I decided to sell on the break below $1.35, at $1.3496, with a stop at 1.3532. But I was too early in my call; the price consolidated after the earlier 200-pip fall and just reached far enough to trigger my stop before crashing down to $1.3470. It wouldn’t have been a big profit, and it wasn’t a big loss, just professionally irritating.

The profit for that day ended up at a net £90, but over the week I made a decent shade over two grand; a better start to the year than Marks & Sparks.