NFP # still significant now?

The latest two NFP number, Nov's and Dec's of 2004, both were not bad but dollar's corrections vs euro after the number release were both easily defeated by dollar shorts re-entry. There were two reasons for that. First, it seemed no matter whether NFP number was good or bad, Fed would keep hike rate in a 'measured' pace. Second, even when market's consensus was Fed funds rate would continue to rise maybe to 3.75%, dollar had still been aggressively sold across the board since the mid-Oct. Well the excuse of dollar shorts were the current account deficit of U.S.. I say it was an excuse because before U.S. presidential election, the harm of current account deficit was as severe as after that and even though Kerr had been the president, this problem could not been changed; on the other hand, in the very near term, net capital inflow to U.S. was still able to balance the current account deficit. There was no possibility of dollar crisis then. I suspected the recent dollar drop in fx market was because the dollar shorts, maybe hedge funds leading them, simply fulfilled their plans to make better revenues in the last quarter for the whole 2004. Only to push dollar downward was much easier than upward as there were obvious excuse and U.S. govt obviously possessed a 'weak dollar' policy.

EUR/USD dived to 1.3384 and GBP/USD dived to 1.8979 in yesterday's Asian market, a very thin market since only Hongkong, Singapore and some Middle East Market opened their markets. Stop orders under 1.3500 for EUR/USD and under 1.9100 for GBP/USD were swept away for sure. However, I doubt there were no large amount of stop orders under 1.3400 for EUR/USD and under 1.9000 for GBP/USD. Otherwise, the rush under such levels could have been much more than 16pip and 21pip. And shortly after the breaches of 1.3400 and 1.9000, euro and pound sterling rised also wildly back to 1.3572 and 1.9156 in the afternoon of Hongkong local time or moring of Middle East local time. I merely want to illustrate that from the above elaboration, for example for EUR/USD, if there were stop orders, they more likely clustered around 1.3500 instead of 1.3400 and their owners were more likely medium-term euro longers who bought euro between 1.3500 and 1.3600. After Monday's dive, I opin no old medium-term euro longers for now. For long-term euro longers, their tolerance to hold their longs in a correction of EUR/USD seems far below 1.3400 and possibly around 1.3250.

Dec's ISM index well fell in consensus, 58.6 vs 58.5, although its employment index was at 52.7 vs Nov's 57.6. It may shade the coming Dec's NFP number. From today to Friday, there will be no other index important than these two. In the first paragraph, I doubt NFP were not and maybe will be not the excuse for long-term players. And in the second paragraph, I suppose long-term euro longers are not going to reduce their positions until EUR/USD dives below 1.3250. From the above deduction, I expect the history in Nov and Dec of 2004 will repeat if EUR/USD holds 1.3250 before the release, a good NFP number will only give a good opportunity for long-term euro longers to add more long positions and for medium-term players to build their new euro long positions at a preferable level. A bad NFP number will be worse for dollar.