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Market Wrap
It is a fine balance between good news, great news and market-moving news.
Today non-farm payroll report was seemingly just right for the risk-on markets, with just a big enough, positive number, to show that the economy was not in dire straits but not doing so well that the Fed may come to an early decision on tapering their support for the markets.
The market analysts had predicted at least 650k jobs were created in May, with the highest estimates coming in nearer to the million. So, a 559k NFP came in under expectations and on any other day may have disappointed the market and therefore we could have had a market fall today.
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As it stands at the London close, the equities markets are up off their day’s lows and the Nasdaq is leading the gains with an increase of 1.63% to trade above 13750.00 and towards the highs of the range we saw get carved out over the last 8 trading days. A break higher for the Nasdaq could set in motion a new bull run to the all-time highs as long as the US bond yields continue to roll over to the downside.
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The US dollar index came crashing back down to the $90.00 level which was my base case scenario today, having fond resistance at the previous swing high yesterday. The fact that we have come back into the middle of the consolidation zone that formed over the last couple of weeks, makes me think that there will be buyers here next week and this could be used as a base to take the US dollar higher. If by the end of today’s US session, the price of DXY has drifted towards the bottom of that range, we may get a chance to see sub $90 US dollar prices for a sustained period. Otherwise, we are going to need some really good data out of Europe to put a cap on the dollar strength.
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Oil gained 4.84% this week with 0.73% of that added today, and now WTI is trading firmly above $69.00 and the year’s highs.
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Precious metals had a rough day yesterday, but today’s price action shows the bull trend may not be over as we trade back above last week’s lows in Gold, with the $1900 level likely to offer resistance today. Producers on the Commitment of Traders Gold data started adding back into the short positions when gold futures traded around $1820-$1840 and have been increasing their position at a higher rate than we have seen for a month or so, ensuring that they lock in these elevated prices. The price action is a very controlled rising channel, and these patterns do have a tendency to break in the opposite direction on a pullback correction.
