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Market Wrap
According to Automatic Data Processing Inc. (ADP)’s National Employment Report, the private sector beat expectations and added 568,000 jobs in September compared to August.
Large companies made up most of the increase, hiring 390,000 new employees in September. There were 466,000 new jobs in the service-providing sector, while 102,000 jobs were added in the goods-producing sector. While tourism and hospitality remain some of the biggest beneficiaries in the pandemic recovery packages, hiring is still heavily impacted, particularly for small firms. It is hopes that the current employee hiring bottlenecks will fade as COVID-19 related infections reduce and people are vaccinated.
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Natural gas futures plunged more than 9% to $5.7/mBtu following remarks by Russian President Putin that Gazprom will send more gas to Europe via Ukraine.
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Brent crude also had a down day today on further data showing a billed in inventories. The Energy Information Administration figures revealed an increase in commercial crude oil inventories in the US over the past week. Stocks of U.S. commercial crude oil (excluding those held in the Strategic Petroleum Reserve) gained 2.3 million barrels from the previous week. US crude oil inventories are about 7% below the five-year average for this time of year at 420.9 million barrels.
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The US dollar index once again found resistance up around the $94.50 level as US Treasury Secretary Janet Yellen asserted that the debt ceiling issue is urgent and requires “immediate attention.” During a meeting today at the White House between CEO’s and US President Joe Biden, Adena Friedman, President and Chief Executive Officer of Nasdaq stated that the stock markets are experiencing “elevated volatility”. This can largely be attributed to uncertainty around raising the debt limit.
The different news outlets have been running stories on the Senators filibuster and political brinkmanship and according to U.S. Senate Majority Leader Chuck Schumer, Democrats are working to “end the GOP-manufactured default crisis as soon as possible” and “avoid irreparable economic harm to the American people and families.” In a tweet, he said, “Today, the Senate will vote on moving forward on House [of Representatives]-passed legislation to suspend the debt ceiling.” The tweet came moments after Mitch McConnell said the Democratic Party has “plenty of time” to fix the debt ceiling issue and called for a reconciliation bill to resolve it.
The forex heatmap shows that the end of London session into the US session has seen flows from the commodity and high yielding currencies into the safe havens of yen, Swiss franc and US dollar. This had weighed on the equities as well which are all red bar the Nasdaq and Shanghai Stock Exchange (which is closed).
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With an elevated US dollar, the GBPUSD and many other crosses have found progress tough today. Once again, the 1.3600 level on cable was too much, along with the dynamic resistance of the daily 20 ema. If the US dollar does resolve to push through to the $95.00 the path of least resistance for the pound is probably to test the old resistance levels of 1.3400-1.3350 again.
