Who Has Lost More Jobs - Men or Women?
By: Kathy Lien

 The U.S. labor market report was released this morning and the data was much better than everyone had anticipated. Following the warning from Larry Summers that the storms in the Northeast could have swelled unemployment rolls, investors were bracing for the worst. However disaster was averted and Larry Summers will probably not be forecasting payrolls again anytime soon having embarrassingly caused a stir in the financial markets (but then again Summers is never one to be embarrassed easily). As I wrote yesterday, Summers did not have the NFP report on hand when he gave the warning which was clearly the case as payrolls fell a mere 36k.

There has been alot of analysis published on the NFP number including including ours on FX360.com. One thing that I do want to point out is that the blizzards took away slightly more than a million jobs which means that next month’s report should reveal a big jump in job growth.

Instead I thought it would be interesting to look at where the levels of employment and unemployment are for men and women. This data, calculated from the Bureau of Labor Statistic’s information is based upon the seasonally adjustment numbers for men and women over the age of 20. There are more men than women in the labor force but we have two scales on our charts to make the comparison between the rate of change easier.

The U.S. recession began in December 2007 and the number of employed men have fallen by 6 percent while the number of employed women have fallen by 2 percent since then. The level of unemployment amongst men has risen by 123 percent while unemployment for women have risen by 85 percent.

It appears that Chinese inflation is on the rise again, indicating that the country is seeing strong economic growth. Again. China's leaders are wary of seeing such rapid growth, and are expected to clamp down, possibly even revaluing the yuan against the U.S. dollar.

However, the moves the Chinese are likely to make probably won't be that large. China recognizes its place as the current leader of global economic recovery, and is aware that limiting its growth too much will also limit the speed of global economic recovery.

GFT's Boris Schlossberg speculates in FX360 on what could be next for China:

The cost of such a shift however, has been a marked rise in inflation and many analysts are now fearful that the Chinese authorities will begin to clamp down on monetary growth by either raising rates or revaluing the yuan. However we believe that any tightening moves will be gradual at best and will be undertaken only after the Chinese are convinced that US economy is beginning to fully participate in the global recovery.

China may not have too long to wait for the U.S. to get a little more active in the global economic growth scene; there is speculation that things are improving enough that the U.S. will raise interest rates in the second half of 2010.

The outlook for USD/CAD is slightly bearish right now, with the Canadian dollar possibly eying parity in currency trading on the FX market. 

Indeed, the Canadian economy was never in as bad of shape as the U.S. economy during the recession, and the fact that global recovery in general is picking up steam -- and commodity prices in general are trending higher -- is helping the loonie in forex trading.

However, there is still a ways to go before the Canadian dollar reaches parity with the U.S. dollar. However, some believe that if the loonie can break through the 1.02 level, it will make it a little easier to get down to that USD/CAD 1.00 level that indicates parity in currency trading.

Will a better than expected nonfarm payrolls at the end of last week, and with the recent hike in the Fed discount rate, it looks as though things could be picking up for the economy, and the Fed is preparing to exit from stimulus measures. 

As a result, there is a great deal of speculation surrounding when the Fed might begin raising interest rates. GFT's Kathy Lien offers insight into this matter in FX360:

According to futures contracts, the market is pricing in a 28 percent chance of a 25bp rate hike in August and a 42.3 percent chance that the rate hike will come in September. By the end of the year, there is a 68 percent chance that rates will reach 0.75 percent. ... [T]here is a very strong chance that interest rates will remain below 1 percent come January 2011. This is good for the U.S. economy because low borrowing costs encourage investment and spending. It will also be good for the dollar simply because outside of the Reserve Bank of Australia, the Fed is the only central bank that has toyed with interest rates (albeit the deposit rate only) which suggests that they are the closest to raising rates again.

With the Fed expected to raise rates again in the near future, and Europe and Britain expected to remain behind the curve due to their slower recovery and deficit problems, there is a chance that the dollar might retain its relative strength for a while longer.

The Swiss National Bank appears to be intervening -- albeit it on a very small level -- in forex trading again. The SNB has been intervening on occasion since last year, when it announced a policy meant to keep the franc lower against the euro in forex trading.

MarketWatch reports on the possibility that the SNB is intervening again:

Another round of rumored currency intervention by the Swiss National Bank Wednesday appeared to be a warning shot designed to chill traders looking to sell the euro versus the Swiss franc as monetary policymakers prepare to meet, analysts said. ...

"If it was an SNB intervention, it was probably one of the smallest ones we've seen ... it's really just sort of backing traders off (of buying the Swiss franc) ahead of tomorrow's meeting," said Peter Rosenstreich, chief market strategist at ACM in Geneva.

At any rate, the Swiss want their currency weak in relation to the euro in forex trading, since during times of recession and economic uncertainty it can be beneficial to have a weak currency.

What Makes Prices Move?

People often ask "did fundamentals trump technicals on that trade?" or something along those lines. No offense to anyone out there, but that is a ridiculous question. There are not two boxers names "fundamental analysis" and "technical analysis" slugging it out for trading supremacy. Sometimes a major news announcement will shoot the price past a strong technical level, but that's why I don't enter trades right before a major news announcement. How do we measure "fundamentals" though? Does that mean an announcement today, the overall economic scope of a country over the past century, or something in between?

The reality is that the only force that moves prices in any market is the buying and selling of the financial instrument. For our purposes, we will use currency trading as an example, but this is true in all liquid, openly traded markets. Currency prices don't fluctuate on their own. They only move up when traders are willing to buy at a price higher than the current price, and the only move down when traders are willing to sell at a lower price. That sounds incredibly simple, but this is a very important fact to establish.

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