Second Wind Moves Are Always Key

08/04/2014 9:00 am EST

Focus: CURRENCIES

Ryan Littlestone of ForexLive.com discusses the second wave effect in relation to currencies as we move forward following last week’s sharp decline.

The obvious knee jerk is over and now the market is chewing through the numbers and what they really mean.

USD/JPY came off 30 odd pips on the number, spooked by the fall in payrolls and unemployment rate (see participation rate).

Inflation clues are nil from both this and the incomes data and average earnings falling is probably the most worrying part.

We’re more or less back to the starting point as far as prices go, but the second wind effect needs to be watched for. If the market adds it all up and likes what it sees then the dollar could edge higher. If it doesn’t then the second wave could take us lower.

On the face of it I think the market will ignore this and move on to concentrate on the manufacturing data coming up as that will give the next clue on how the US recovery is coming along.

If anything, it’s given us some real levels to watch as those spikes up and down in USD/JPY, EUR/USD, GBP/USD, and elsewhere, give us an idea of where the close intraday interest is.

By Ryan Littlestone of ForexLive.com

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