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Market Brief
Markets feel a bit subdued as we wait for the US ADP jobs data today and US NFP jobs data on Friday. Today’s economic calendar is light on Tier 1 data, though the London session may find some direction on the back of the Final PMI data out of Europe should there be an unexpected shift from expectations. At the start of the US session, I am expecting a bit of volatility on the back of the US ISM non-manufacturing data but then we have the Fed speaking at different events, so the market will probably want to wait to see if they drop anything new in their speeches.
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The market is expecting a bit of a draw on the US EIA Weekly Crude Stocks and currently, the price action on the WTI chart is looking distinctly bullish. Price is moving away from the rising daily 50 & 200 exponential moving averages (EMA) and after yesterday’s $2 move higher there could be an acceleration towards the swing high from 8th March 2021.
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The bullish moves in oil are counter to what we would usually see when the US dollar is also rising. Again the US dollar seems very reluctant to test lower and appears to be on the verge of getting above the 50-day EMA, which could then be the catalyst for a further retracement into the $92 area. I am thinking that if the jobs data this week is disappointing this will be the trigger for the US dollar to come off lower, but until the covid-19 situation across the globe gets better the US dollar is acting as a safe haven often. Brazil and India are reporting thousands of new cases daily and we also learned today that in Australia’s NSW their first new case has been identified since March.
Today’s ADP Employment change is forecast to be 800K, with the low survey of 525K, anything under last week’s 517K new jobs would be very disappointing and would lower expectations for Friday’s NFP. At the peak of the pandemic job losses, the US percentage of unemployed for 15 weeks or over went up to 5.1% from the 1.1% pre-covid, and is currently at 3.5%, with the Fed Chair Powell admitting that some of those jobs just will not be coming back as companies have restructured and modernized their workflow. Full employment is one of the key mandates for the Fed’s monetary policy, so a lot of emphasis will be placed on these job numbers.
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The EURUSD is below yesterday’s low, signalling another down day today. Traders will be targeting the balance area from mid-April with a possible flush through those levels on stronger US dollar moves to 1.1880. However, the current price is at a previous pivot level that has been Support, and then Resistance in the past, so 1.1965 will be a tough nut to crack.
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The UK’s FTSE 100 continues to grind higher and yesterday printed above 7000 for the fifth time in the last 30 days.
The ActivTrader sentiment indicator shows that the bulls and bears are evenly matched, mirroring the lack of direction for the last week or so. The big figure was quickly rejected yesterday showing a continued presence of active sellers up at this important psychological level. The weekly and daily charts are showing that the momentum is to the upside, but the inability to push through the February 2020 price action may mean that the price comes down to find fresh buyers. 6800 would appear to be the first obvious place to target to the downside, and this could be brought on if global equities have further losses today. Of the 3 big US indices, only the DJIA is up for the week, with the Nasdaq and S&P500 down -2.57% and -0.47% respectively.
