NFP surprise, dollar up

The Non-Farm Payrolls came in at 11K lost jobs - way better than the expected 125K lost jobs. That put some fire under the dollar because suddenly it looks like a rate hike is back on the table.

So unfortunately, gold has taken a hit after it broke $1200  and $1220 over the past couple days. It spiked to below $1190. The Euro, GBP and Yen have spiked down against the dollar.  Interestingly, Euro gold has come down a bit and is possibly forming a top. CHF (Swiss Franc) has also dropped against the dollar, which does not bode well for gold. Both CHF and gold are considered safe havens, but the ironic thing is a rising dollar may bring down equities, eventually.

For the moment, equities are zooming up. Maybe that will continue for a while until carry trade unwinding pressure builds (possibly at 80 or so on the dollar index).

The forex charts are looking extreme, like there is a decisive change in sentiment as regards the dollar. Let’s see what happens.

The bad news is, gold is behaving like a risk asset, as evidenced by the Dubai spike down, and now like a safe haven (essentially the opposite), as evidenced by this spike down. This underscores the speculative interest behind current prices.

This entry was posted on 04/12/2009 at 03:50 pm and is filed under Gold. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or trackback from your own site.

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