U.S. Job "Strong", but Commercial Rombo Explode for $98.5 Billions – The Fed Trap Is Armed

Igor Pereira · Thursday at 18:32

Traders, the market today received a flood of US economic data that seem to tell two completely different stories.

On the one hand, the headline shines with industrial resilience and fewer layoffs. On the other hand, the subtext reveals an economy that is bleeding capital abroad at an alarming rate. This divergence is exactly what creates brutal volatility — and massive opportunities — in Gold (XAU/USD) and Dollar.

By Igor Pereira Financial Market Analyst

Below, the technical dissection of these numbers and how Wall Street will use them to manipulate the institutional flow today.

The high-frequency robots (HFTs) read the headlines and bought Dollar immediately. Here's why:

Initial Employment Insurance Applications: They fell dramatically to 206 thousand. (the expectation was 223,000; the previous was 227 thousand). Less people are getting fired this week.
Philadelphia Fed Manufacturing Index (Feb): It crushed expectations, jumping to +16.3 (the expectation was only +7.5; the previous one was +12.6). The manufacturing activity in the region is expanding strongly.
Superficial Reading: These two data give the Federal Reserve exactly what he wants: the perfect excuse for do not cut interest in the short term. The economy looks hot.

But when we look beyond the headlines, the macroeconomic structure of the United States is crumbling.

Commercial Balance (December): The deficit exploded for impressive - 98.5. Billions (expectation was a smaller burst of -$86 Billions).
The Meaning: The US is importing a lot more than exporting. They're sending almost $100 billion overseas in a single month. This is capital leaving the American economy.
Continuous applications for unemployment insurance: They went up to 1.869 million (above 1,860 million expected). Translation: People are not being fired in bulk (yet), but those who lose their jobs Can't find another. The labor market is freezing from the inside.

How do we connect this to the secret injection of $18.5 billion into the Repo market we revealed yesterday?

The Dollar Trap (DXY): The Dollar will try a short-term rally (Pump) driven by manufacturing data and initial requests. But this rally is unsustainable. You can't keep a strong currency in the long run with a trade deficit leaking almost 100 billion a month.
The Gold Setup (XAU/USD): Gold may suffer a reflex salesperson pressure (Knee-jerk reaction) today due to the perception that the Fed will keep interest high. That fall is our entrance.

They're masking a catastrophic trade deficit with regional manufacturing data.

My Vision: The Fed's "strong economy" narrative lies by a thread.

Tactical Patience: Let the retail traders sell Gold and buy dollar in the thrill of the headline.
The Fundamental Truth: A deficit of $98,5 billion means the world is accumulating dollars. As we saw with China, they no longer want to put these dollars into US Treasury bonds; they will buy Physical Gold.

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