Payrolls Safety Sought
The steady stream of positioning adjustments throughout the week, exacerbated by the mid-week revision in payrolls expectations and not-so-dovish ECB has left many scratching heads over just how to position for Friday. In particular, markets do not seem particularly sure what kind of a number is ‘good’ or ‘bad’ for the dollar and risk appetite in general. In hindsight, it appears that FX markets have moved first, but will take its next cue from how equities and fixed income perform. Given the current correlations, a payrolls result that boosts US yields would be welcome for dollar longs, and the equity market reaction is surprisingly secondary.
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