Do the terrible numbers mean the Federal Reserve will be back in play with more stimulus, thus weakening the dollar?
Does weakening employment momentum mean that commodity prices will ease as real demand from factories and other consumers declines?
The dollar — – whether embodied by the DXY index or leveraged ETFs like the dollar ETF (NYSE:UUP) — should rally if commodities are selling off in a reversal of the “risk on” trade. But at this point, this trade is too crowded for such a simple lock-step move.
Here are the facts. The U.S. economy only created 54,000 jobs last month, pushing unemployment back up to 9.1%.
DXY took a dive right after the numbers came out, but then rallied back to flat. Then it moved higher. And now it is lower again.
Basically, the market has no clue.
The view around here is that the dollar goes higher and the Fed does not rush in to rescue the economy. This argues in favor of dollar-long funds like UUP and against their short counterparts like (NYSE:UDN):
But this message needs to be made clear before we can confirm anything.
Meanwhile, buying in the Treasury market has been very dollar-friendly. Recent action puts the 10-year bond back in line to test 2.80%.
Emerging Money provides insightful and timely information about the increasingly important world of Emerging Market investments. CNBC Emerging Markets Contributor Tim Seymour leads the team of Emerging Money to bring you cutting edge global news and analysis.
About Tim Seymour: Tim is a founder of Emerging Money. He is a founder and Managing Partner at Seygem Asset Management, and The Emerging Markets Contributor to CNBC. Seygem Asset Management focuses on investing throughout the global emerging markets asset class. With a view that emerging and developing economies will continue to outpace the economic growth and advancement of developed economies, Seymour has devoted a career to investing in the dominant markets of tomorrow, today. Seymour’s career has included significant experience in both alternative asset management (hedge funds) and capital markets, having launched two hedge funds, and built the largest Russian broker dealer in the USA. Seymour started his career at UBS, focusing on international credit (cash, swaps, forex) in a specialized hedge fund group (New York). Seymour completed the firm’s training program after graduating with an MBA in international finance from Fordham University. Seymour received his undergraduate degree at Georgetown University.