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Market Brief
Today’s economic calendar is pointing towards the US non-farm payroll and wages reports.
The US economy is expected to add 650K jobs in May, well above 266K in April, as the economic recovery continues to be reliant on vaccinations and government support. If the payroll data comes in better than expected today, there will be a worry in risk assets that the Fed may turn off the support earlier than previously thought, which could see the likes of the Nasdaq drop. But overall fiscal support is still strong, so any dip should still be considered a buying opportunity while the markets are technically above key supports.
We may get a bit of movement in the European session after the EU HIS Markit PMI or EU Retail Sales, however, the single currency is going to be most likely affected by the speeches by President Lagarde and Fed Chair Powell who are talking at a conference today at noon.
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The EURUSD is currently trading below last week’s range, as 1.2200 proved to be too strong a resistance. The momentum on the weekly chart is still to the upside with a break of 1.1985 signalling a more significant low and a possible change in long-term direction.
In the Asia-PAC session, Australian Home Loans grew to a new record high. Australian Bureau of Statistics (ABS) head of Finance and Wealth, Katherine Keenan, said: “The value of new loan commitments for owner-occupier housing reached another all-time high in April 2021, up 4.3% to $23.0 billion. New loan commitments for investors rose 2.1% to $8.1 billion, which was the highest level since mid-2017.” “The rise in owner-occupier lending was driven by increased loan commitments for existing dwellings, which rose 9.2 per cent. Loan commitments to owner-occupiers for the construction of new dwellings fell by 11.4%, following a fall of 14.8 per cent in March. These were the first monthly declines since the Homebuilder grant was introduced in June 2020. However, the value of construction commitments remained at a high level.”
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The ActivTrader sentiment indicator is perfectly balanced between Bulls and Bears for the AUDUSD. The daily 200 ema is below at 0.7575 and would be a great target should the bears take control, which is quite likely now that we have the 20 and 50 daily ema’s likely to cross should we have another down day today.
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The German DAX is starting the London session higher pushing for new all-time highs, while the UK’s FTSE is down -0.13% so far but keeping its head above the 7000 level. Oil is trading higher with $69.0 per barrel having acted as the resistance level at the London open, with continued bullish momentum likely to push oil higher today as we remove the stops from above intraday swing highs.
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The USDJPY is stair-stepping higher with large impulsive green daily candles followed by little periods of consolidation. Yesterday’s price action took the USDJPY above 110.00 and towards the April 2021 swing high.
Household spending data from Japan shows an increase of 13% from a year earlier well above market expectations of 9.3%. Base effects from 2020’s sharp fall due to the initial impact of the COVID-19 crisis and rising fuel costs added to the prices of goods with spending on food rising 3.5%.
