Hold Or Fold – U.S Job Data To Disapoint

I was going to wait until “after” the jobs report here this morning, to see if we get a better idea of direction moving forward. Why bother.

The number will be a disappointment as I expected, with the media suggesting that the poor employment numbers are largely due to “poor weather” (I don’t think I’ve ever heard “that one” before).

Markets continue to question “if indeed” Yellen will stick to the plan of tapering, or even as soon as next week – make suggestion otherwise. I’ve been hearing that The Fed feels they need to see “a little more data” before considering flipping the switch and “tapering the tapering”, so mid March still looks like a reasonable time frame to expect “something big”.

We’ve bounced a little bit here this week, with AUD also moving up with “risk appetite” as the ol standard correlation goes, but all in all, it still only looks like a “bit of a counter trend move” in a fairly well-defined down trend.

I’ll be off to Belize here this morning, currently holding several pairs and frankly not that thrilled about it. The entire week trading flat ( and I mean really flat ) generally puts me on edge, as I hate holding anything for too long. I’ll let the jobs data hit, then re-evaluate holding,or possibly dumping a number of positions before I head out on holidays.

 

Fed Tapering Timeline: Reading Between the Lines

The reality is that markets are getting ahead of themselves, as usual. Everyone’s waiting for crystal clear signals from the Fed, but here’s what they’re missing: the central bank doesn’t telegraph their moves until they’re absolutely certain. This dance around “more data needed” is classic Fed speak for “we’re buying time to see if our current strategy is actually working.”

The employment numbers were predictable, and blaming weather is the oldest trick in the book. What matters now is how currency pairs respond to this manufactured uncertainty. The dollar has been hanging in limbo, and that creates opportunity for those willing to position themselves correctly.

AUD Strength: Counter-Trend or New Direction?

Australian dollar strength this week caught some traders off guard, but it shouldn’t have. When risk appetite returns, even temporarily, AUD is one of the first to move. The correlation with broader risk sentiment remains intact, despite what the talking heads might suggest about commodity currencies being “dead.”

The bounce we’re seeing looks like classic counter-trend action within a larger bearish framework. Smart money isn’t chasing this move higher – they’re using it as an opportunity to establish better short positions. The fundamentals haven’t changed: Australia’s economy is still tied to Chinese demand, and that story isn’t getting better anytime soon.

Watch the key resistance levels carefully. If AUD can’t break through convincingly, this rally becomes nothing more than a gift to patient bears.

Position Management in Sideways Markets

Flat trading weeks are psychological torture for active traders. The temptation is always there to force trades that aren’t really there, or hold positions longer than they deserve. This market environment demands discipline above all else.

When volatility disappears, position sizing becomes even more critical. The trades that work in these conditions are the ones with clear technical levels and defined risk parameters. Everything else is just noise that will eat away at your capital slowly but surely.

The smart play here is cutting positions that aren’t working and being selective about new entries. Markets that go nowhere for extended periods have a habit of making violent moves when they finally pick a direction. You want to be positioned for that break, not caught holding dead weight.

Dollar Weakness Ahead

Despite the Fed’s tough talk, USD weakness is becoming more apparent with each passing week. The fundamentals are shifting beneath the surface, and most traders are still fighting the last war.

The dollar’s strength over the past year was built on interest rate differentials and safe-haven demand. Both of those pillars are starting to crack. Other central banks are catching up on the rate front, and global tensions that drove safe-haven flows are stabilizing.

More importantly, the Fed’s own communication is creating doubt about their resolve. Every hint at “needing more data” undermines the dollar’s premium. Currency markets are forward-looking, and they’re starting to price in a less aggressive Fed well before official policy changes.

March: The Real Decision Point

March remains the critical timeframe for meaningful Fed action. By then, we’ll have enough employment data, inflation readings, and market reaction to make informed decisions about policy direction. Until then, we’re trading in a information vacuum filled with speculation and positioning.

The currency pairs most sensitive to Fed policy shifts are showing early signs of fatigue. EURUSD has been grinding higher despite weak European fundamentals. GBPUSD is holding levels it has no business holding given UK economic conditions. These are subtle hints that dollar dominance is weakening.

For traders, this means staying flexible and avoiding over-commitment to any single theme. The market bottoms we’ve been seeing across risk assets suggest broader sentiment shifts are underway. Those who adapt quickly will profit, while those married to old themes will get left behind.

The key is patience mixed with opportunism. Let the Fed show their hand in March, but be ready to act when the signals become clear. This market won’t stay sideways forever.