NFP day

Of course the mother of all econ data - the US non farm payroll numbers, which came out much worse at -467k vs expectations for a - 300 plus k reading and killed the market.

US stocks are trading -2%.

Reading into more details, the depressing thing about it is that the service sector lost alot more jobs than in previous months. As the service industry make up a bulk of the world's biggest economy, this is a big hit and will put to rest hopes for a quick rebound in the US economy.

Even the federal government fired more than they hired.

I'd be watching the next few months' service industry sacking rate to gauge the strength of the recovery.

Comparing with fx however, risk aversion flows into the dollar is not as drastic, surprisingly. The Euro and Sterling Pound are trading just under 1% lower against the greenback, compared with close to -2% in stocks. Only the NZD is trading lower by more than 1% against the dollar.

Reason being, the weakening US economy does not bode well for a strong dollar. Also, next week the US Treasury will be issuing close to USD 80 bn worth of treauries, further weakening the fiscal position of the US.

This of course, though is not as high as the record USD 104 bn issue last week, is still a huge auction by any measure. Afterall, its all accumulative, like our own credit card debts.

Going forward, I believe there should be a continuing of dollar buying in the next few days as the market reverberrates from the shock of the NFP fallout. But this would be limited for the reasons mentioned above.

Over the medium term, I see the majors strengthening against the dollar.

Yen looks likely to be the safe haven of choice. Japan afterall sits on massive savings and has surplus supported by investment income. Selling cross yen pairs (e.g. EURJPY, GBPJPY, AUDJPY, NZDJPY) in the event of risk aversion would be ideal.