The
most recent Australian employment figures, which were released by the
Australian Bureau of Statistics (ABS) before the open of the London session
yesterday, as Oz is in a different time zone, showed an extraordinary rise in
employment. This went completely against the tendency Down Under, which is for
a softening economy and all that goes with it.
No
sooner were the figures released than commentators, particularly in Australia
itself, began to doubt their reliability. In an article in Business Spectator,
the well-respected Callum Pickering, (Making
sense of the surprising jobs spike) was one of the foremost.
After
discussing sampling issues, the noise-to-signal ratio and much more, he came to
the conclusion that
“As for the Reserve Bank of
Australia, it is firmly in wait-and-see mode. They won’t have to make any major
decisions using this data. After the initial confusion and a few frustrated
calls to the ABS [Australian
Bureau of Statistics], I expect that the
RBA will simply write this month off and hope that the data returns to normal
soon”.
We go short on a pull-back
As
the announcement was taken at face value by market participants initially, there
was a sudden reversal in the downward trend of the Aussie currency pair
(AUDUSD). As can be seen in the chart above, this provided our Mandelbrot algorithmic
routine with the opportunity it had been waiting for, to get in on the short
side.
Later
in the trading day, when the reality of the dodgy figures dawned, the pair
resumed its journey to the downside.
We
have been convinced of Aussie weakness for a little while. However, it is not
good market discipline to chase a move in any instrument, so one must wait for
either a dip or a pull-back in order to get in, while keeping probability on
one’s side.
Mandelbrot
has, in accordance with its instructions, already locked in profit on half the
position and moved the stop-loss to Break-Even.
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