US markets keep chugging higher this morning with the Dow Industrials trending toward another all-time high and the S&P 500 continuing to advance on its 2007 peak. US jobless claims dropped to their best level in six weeks. This news, combined with yesterday’s strong ADP payrolls has raised the bar of expectations for tomorrow’s nonfarm payrolls report, and keeping a tailwind behind US stock markets. News that the US House has passed a bill to keep the government running through September putting off another manufactured crisis has removed some overhanging uncertainty as well.
While capital coming out of defensive havens mainly seemed to go into US stocks yesterday, today the action has been more balanced with European indices and commodities on the rebound today. There was no one big development driving improved sentiment, rather a combination of small things such as a small reward to Portugal in terms of an improved credit outlook for sticking with its austerity program, and a slight improvement in Greek unemployment.
Comments from ECB President Draghi after today’s hold the course ECB decision may also be helping boost conficence today. He noted that 40% of the LTRO emergency liquidity loans issued last year have been repaid, a sign that the financial sector has strengthened significantly, but that the ECB remains accommodative and ready to step in if needed.
Commodity markets have also bounced back a bit. The main focus today is on natural gas which could be active off of today’s storage report. Crude oil is rallying and grains have rebounded, gasoline has retreated a bit and copper appears to be stabilizing ahead of tomorrow’s Chinese data.
In currencies today, European currencies, particularly EUR, SEK and NOK have been on the rebound, gaining at the expense of USD and JPY. Precious metals have picked up a bit on the greenback but continue to struggle overall. Resource currencies like AUD, NZD and CAD have moved up at a slower pace held back by a disappointing Australian trade balance and yesterday’s weak Canadian PMI report.
Significant economic announcements released overnight include:
Brazil interest rate decision 7.25% no change as expected
Japan interest rate decision 0.10% no change as expected
UK interest rate decision 0.50% no change as expected
UK QE decision £375B no change as expected
ECB interest rate decision 0.75% no change as expected
Germany factory orders (2.5%) street 1.6% vs previous (1.8%)
France unemployment rate 10.6% vs street 10.5%
Greece unemployment rate 26.4% vs previous 27.0%
US Challenger layoffs 55,356 up 7% over year
US jobless claims 340K vs street 355K vs previous 344K
US trade balance ($44.4B) vs street ($42.6B) vs previous ($38.5B)
Canada trade balance ($0.2B) vs street ($0.6B) vs previous ($0.9B)
Brazil industrial production 5.7% vs street 4.6%
Australia trade balance ($1.0B) vs street ($0.5B) vs previous (0.4B)
Standard & Poors confirmed Portugal’s BB credit rating, improved outlook to stable from negative.
Upcoming significant releases include:
10:30 am ET Natural gas storage street (131 BCF) vs previous (171 BCF)
North American indices
US30 continues to climb but a negative RSI divergence suggests momentum appears to be slowing is it approaches potential measured resistance in the 13,060-13,080 range.
SPX500 is holding above its 1,535 breakout point with its 2007 high near 1,575 still in sight.
NDAQ100 continues to consolidate this week’s breakout over 2,780 retesting that level as new support. Potential upside resistance on trend appears near 2,840, a measured 2,860 and 2,880.
US SmallCap 2000 is bumping up against the high end of its 895 to 935 trading channel wit next resistance on a breakout near 975 on trend. Initial support moves up toward 920.
Canada60 keeps holding steady near the middle of its 725-745 trading channel.
UK100 is consolidating recent gains near 6,440 holding well above its 6,380 breakout point while RSI indicates upward momentum remains intact. Next measured resistance on trend appears near 6,540.
Germany30 remains supported above its 7,900 breakout point with next upside resistance on trend looming near 8,000 then 8,300.
France40 continues to encounter resistance at the high end of its 3,600 to 3,800 trading channel. RSI suggests upward momentum continues to build with a measured run at 4,000 possible on a breakout.
Italy40 stopped short of 16,130, failing to fill in a downward gap, and has slipped back under 16,000 while RSI has levelled off near 50 all suggesting that rebound momentum has stalled. Initial support appears near 15,880 then 15,760 in a correction.
Spain35 is holding above its recent 8,350 breakout point but encountering some resistance near 8,450. RSI near overbought suggests some consolidation may be needed but a measured move from the old channel suggests January highs near 8,750 could be retested in time.
Copper is sending mixed signals. An oversold RSI suggests a rebound possible but a symmetrical triangle around $3.50 and the inability to retake the $3.52 breakdown point suggests downtrend remains intact with next support near $3.40 then $$3.25-$3.30.
US crude is turning up out of a double bottom today breaking through $90.75. RSI breakout over 50 indicates momentum turning positive. Next resistance hurdles appear near $91.50 then $93.00 and $94.00.
UK crude is bouncing around in the $110.00 to $112.00 range as it tries to stabilize from a February selloff.
Gasoline has backslided in normal backing and filling but remains in an uptrend with next resistance near $3.00 and $3.20 and support moving up toward $2.92 from $2.85.
Natural Gas has rolled back from $3.55 to $3.45 ahead of storage numbers. Next upside resistance appears near $3.65 with more downside support near $3.35 then $3.20.
FX this morning
Gold has stabilized in the $1,570-$1,585 rage with next key resistance near $1,.600 and $1,625 with support near $1,560 then $1,525. Although encouraging its too early to consider a bottom on this one.
Silver continues to stabilize in the $28.25 to $29.50 area.
USDCAD has stalled in the $1.0250 to $1.0350 range as it works off an overbought RSI and could even still retest $1.0200 but remains in a primary uptrend.
EURUSD is showing signs of life. A big figure gain off a successful retest of $1.2960 and breakouts of both the price and RSI out of downswings suggests renewed interest. The first big tests loom, however near $1.3150 then $1.3200 which need to be cleared to call off a broader downtrend.
GBPUSD once again failed to decisively break $1.5000 support and has rebounded. RSI turning back above 30 out of the oversold zone suggests downward momentum easing. Initial rebound resistance remains near $1.5230.