Non farm payrolls tonight is going to be huge regardless of which way it prints because with more red ink on global stock markets overnight as stronger data in the US once again worried traders about the prospect of Dectaper at this months FOMC meeting.
The second read of US Q3 GDP saw an upgrade from 2.5% to 3.6%, while at the same time jobless claims fell to 298,000, against expectations of 325,000 and personal consumption in Q3 was 2.0% slightly stronger than the 1.9% expected. Heightening tensions a little were comments from Atlanta Fed President Dennis Lockhart who said the Tape should be on the table at this month’s meeting.
So at the close the mid day recovery faltered and stocks continued to weaken into days end and finished near the lows which is an ominous warning for Asian trade. . The Dow is down 0.43% to 15,820, the Nasdaq is off 0.12% at 4,033 and the S&P 500 is 0.44% or 8 points lower at 1,785.
Yesterday’s recovery in the S&P 500 was off the slow moving average I use which is usual and even though I am short a break of 1775 is required for the S&P 500 to take the next leg down – MT4 terms that is.
In Europe both the BoE and the ECB left rates unchanged and ECB President Mario Draghi said the ECB is still trying to figure out how to add further stimulus to the European economy and that they would “consider all available instruments”. But this didn’t help stocks with the DAX down 0.61%, the CAC 1.17%, Madrid 1.56% and Milan 1.75%. The FTSE was down a more benign 0.18%.
On the ASX the close yesterday afternoon was very weak and the technical picture just awful. Overnight the market has slipped further and the SPI 200 contract at 7.15 AEDT sits at 5187 bid, down 22 points on the Dec contract. In continuation terms a move toward 5,065/75 is on the cards based on the technicals.
First stop is 5160 which on the weekly charts is my slow moving average but on a longer term basis if that breaks a move below 5,000 is on the cards technically. For the moment though I’m short and targetting the level outlined above.
I must confess I have no idea what is going on with the Euro. Last night saw an insane response to no rate cut in Europe but strong growth in the US – the Euro rose!
That is not how its supposed to work and is frankly it is extremely strange when you look at the emerging fundamental economic disparity between the two regions. But regardless Euro sits at 1.3672 this morning up 0.61%. GBP is performing what might be considered more normal and is down 0.28% to 1.6336 but the US dollar is under the pump against the yen with USDJPY slipping back to 101.64 for a loss of 0.68% on the day. The Nikkei will remain pressured today on this basis.
The Australian dollar is stronger after another acute weak period after the trade data yesterday. It is establishing a solid support zone for the moment around the 90 cent region and while it is not out of the woods it is up 0.47% at 0.9071. To put this in context though the Aussie is trailing the Euro with EURAUD at its highest level since early 2010 above 1.50 at the moment.
The rally we expected yesterday happened and you can see the emerging support zone under 90 cents and I note that yesterday Westpac put out a piece saying its too soon for an 80′s revival – so the Aussie might just rally from here. I’ve got some Aussie now and we’ll see how it goes. Taget above 91 cents in the next 24 hours.
On commodity markets Gold slipped back losing the $20, which is a large part of what it gained the night before and it sits at $1228 this morning. Silver lost 1.44% to $19.49 oz. Nymex Crude was 0.27% at $97.46 Bbl, copper fell 2 cents to $3.26 lb and on the Ags corn fell 0.65%, wheat dropped 1.43% and soybeans fell just 0.15%.
Datawise tonight is the big one with the release of non-farm payrolls. The market is currently looking for around 180,000 and a number around here or above 200,000 might make things interesting for traders tonight.
In Australia today we get the AiG performance of construction index, trade in France tonight, Factory orders on Germany and Brazilian inflation. Also out in the US is the unemployment rate, consumer credit and the Michigan consumer confidence number.
Have a great day and good hunting
Greg
Please feel free to leave a comment for Greg here
Subscribe to receive Greg’s daily market reports free at the Vantage FX Learning Centre.
NB: Please note all references to rates above are approximate and should not be used for trade reference