Compare the (jobs) markets.com.... SIMPLES!!!

So all and sundry seem to be eyeing usd/jpy upside now. And 1m riskies traded at flat last week for the first time in a good long while. Throw in the fact that year end effects are of course a very finite phenomenon and whaddayaget?

Well, in the end, probably not as many fireworks as people think. No-one on the street seems to want to be caught short gamma from what I can see, so that will have a natural dampening effect. And of course today's ADP print took a fair bit of the starch out of the (pre NFP) market.

For those that follow the usual path of talking about correlation (or lack thereof) between ADP and NFP headline numbers, while many naysayers have bemoaned the short term lack of a hard, fixed link between these two measures, just taking a step back and having half an eye on the long game shows that ultimately it's still a close enough relationship. 12m correlation runs in the high 90s at present and with everyone geared up for both an illiquid day and a positive print in a couple of days time, we may well yet see a 'Freaky Friday' if things don't turn out the way they should.......

Pole Dancing - it's fine till you fall off!!!

It seems that the powers that be in Warsaw have reverted to type of late, and are jawboning the euro / zloty rate. Skrzypek (CB chief)'s comment that "The current FX market situation isn't justified by the fundamentals" isn't hugely helpful against a backdrop of their starting to talk openly about European integration again.

H2 2008 / H1 2009 seemed (to me) to be to be mired by constant changes in their stance on timing of any move towards their eventual nestling in the bosom of monetary union. Sometimes seemingly on a daily basis the target / projected date would move by a factor of years until the market basically gave a huge collective yawn every time they (he) were quoted on the wires. Then all went blissfully silent as realisation dawned that at this stage in the proceedings, with the markets the way they were, you could stick your finger in the air as many times as you liked and the results still wouldn't be meaningful.

In the meantime, EUR/PLN currently sits pretty much bang on the 61.8% retracement of the move up to the 4.93 highs last year that saw all the corporates, playing the convergence 'punt' that had bought hefty downside options structures squealing 'foul foul' and calling for the banks to be stuck with the positions, a move that PM Tusk eventually (although not immediately it has to be said) rejected, and quite rightly so.

So where exactly is the problem with the rate? The move hasn't been at all excessive in it's velocity, there is doveish noise coming out of the rates world that should certainly slow things for now, and the exchange rate is still only sitting at levels that we saw in 2006.

Be mindful what you wish for I say.

House music...

RICS housing data today, and frankly a disappointment. Anything North of around 40 / 50 indicates solid housing market health, of the type that will re-inspire consumer confidence in the UK (where we all have short memories and TV stations are still full of re-runs of 'Location Location Location' and 'Grand Designs'. 30 (consensus view) would have represented a level that, while a little short of the excesses of the early noughties (where frankly the housing bubble, in the end, became couter productive) still equates to 65% of surveyors reporting a rice in prices (vs 35% a fall). What we got in the end was a slightly flaccid 17%

Given the structural make-up of this country, that is likely to ring alarm bells at the BoE in my opinion. Consumer confidence, and, by association, consumer demand, is fairly heavily influenced in this country by our trust in our bricks and mortar, and the nascent green shoots that were starting to be seen in Q3 / Q4 last year (at least anecdotally in my street where there was a sudden proliferation of estate agents boards with SOLD notices) may well turn out to have suffered from blooming too early in one of the hardest wintes in recent times. Would it were not so (especially as one 'talking his book') but the balance of probabilities seems to be shifting that way.

A quick look at sterling on a trade weighted basis seems to spell out that in periods of sharp housing decline, sterling's fate takes a similar path (on a lagged basis). Certainly the currency is quicker to sell off than to recover. Next month's print could be crucial, and it's tough to see sterling doing anything but remaining a sell on rallies for now.

Testing Testing

Ok - lets see what we can see. Typing...check! Posting test chart (RUB vs crude)....

Ok - what else do I need to do......