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Due to the markets being generally closed the retail trading platforms without the futures markets did not trade, so we have to look to the futures markets to see what happened on the charts after the NFP data drop today. The Dow Jones Industrial Average futures contract YM, rose 0.5% on the good news before fading from the All-Time Highs (ATH), but still closed positive and above yesterday’s close.
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The good news is that the US economy added 916K jobs in March. With a revised 468K in February beating market analysts’ general expectations. The leisure and hospitality sectors are opening up in the USA which accounted for the majority of the new openings. This increase in jobs resulted in pushing the jobless rate to a 1-year low of 6%. The bad news was that US average earnings came in weaker for March than they did for February. The 1% drop will be a sign that these new jobs are low-paying jobs and we need to see some healthy wage inflation to get consumers spending again.
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The US benchmark 10-year Treasury note yield edged up to 1.70% on Friday before dropping back to the day’s lows, which has the effect of pushing the Nasdaq futures lower after the announcement, and hopefully come market open the NQ can rise again. The S&P500 and DJIA futures were not seemingly affected and continue to push to new all-time highs.
Increased coronavirus vaccinations and further fiscal stimulus support are fuelling this economic recovery but the concern for the fixed income markets is for an interest rate hike cycle to combat the probable inflation. Whether or not the consumer and corporate debt can withstand higher interest rates is up for debate but the US like most developed economies is very indebted.
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The Nasdaq futures (NQ) shows that today’s price moves took out the swing high from the 25th of February 2021, removing some liquidity. If we can start trading above their next week the all-time high level is the next swing high. For those looking for a reason to short the Nasdaq, the price action today tagged the 61.8% retracement from the ATH to the 5th of March Swing Low, so if we are in a bearish counter move and we are set to go lower, that swing low would be the first target.
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During a thin trading session due to Good Friday, the DXY was little changed at 92.8 and remains on course for its third consecutive week, whilst it can hold above the daily 200 ema. The momentum and price action are bullish for the US dollar and for now 95.00 looks a likely target assuming we can get through the Aug’20 to Nove’20 range. With yields rising this is carrying the greenback higher as investors move into the safe haven of the world currency and away from the 0% and NIRP.
