Good morning. Well yesterday played out according to plan with the dip, rise, dip, but then the bulls fought back yet again to get the FTSE back above 6500. Today is NFP news day so expect it to get a little choppy at 13:30 as today’s figure will give a better clue as to whether the US will be tapering QE in September or later. I still think later so it will be interesting to see. For the moment it would seem that the market is still in the buy the rumour and buying the dips, kind of expecting tapering at a later date. Still have Syria simmering away and possible action there – sure it’s the hot topic at the G20 at the moment! With interest rates and UK QE remaining in situ yesterday, markets continue to put pressure on Mark Carney. While the Bank signalled that there would no move in rates until late 2016, markets now believe the first rate rise will come in mid-2015 in light of the UK’s rapidly improving economic prospects.
Asia Overnight from Bloomberg
Asian stocks dropped, snapping a six-day advance and paring the regional benchmark index’s biggest weekly gain since July, as investors await the monthly American jobs report.
The MSCI Asia Pacific Index fell 0.1 percent to 133.08 as of 11:41 a.m. in Hong Kong, on course to rise 2.3 percent this week for the biggest advance since the week through July 12. U.S. payrolls figures today may add to signs of an improving jobs market ahead of the Federal Reserve’s Sept. 17-18 meeting, when it will gauge whether the world’s biggest economy can withstand a reduction in unprecedented stimulus.
The jobs data today “is a very important number because it is the number that Fed policy is benchmarked against,” Peter Esho, chief market analyst at Invast Securities Co., said by phone. “A discussion around employment is going to drive the outcome of the Fed’s meeting later this month.”
US
Futures on the Standard & Poor’s 500 Index fell 0.1 percent. Speculation the Federal Open Market Committee will dial down bond purchases at its meeting this month has pushed up U.S. bond yields and contributed to the worst rout in the currencies of developing nations in five years.
Claims (INJCJC) for U.S. unemployment benefits declined by 9,000 to 323,000 in the week ended Aug. 31, less than the lowest estimate of economists surveyed by Bloomberg. Another report showed companies boosted employment by 176,000 workers in August, according to the ADP Research Institute.
Payrolls Forecast
The number of workers on nonfarm payrolls in the U.S. probably increased 180,000 in August, compared with a gain of 162,000 for July, according to the median of 94 economists’ estimates compiled by Bloomberg.
Dax
Further movement above 8258 remains with an expectation of 8313 next. Movement below 8167 could get very bearish for 8070 points!
S&P
Movement above 1660 remains with an expectation of 1664 possibly 1674 points. If it’s all getting bearish, movement below 1651 allows reversal toward 1643.
Gold
Further weakness below 1365 has a bottom target 1334. Below such a level kills the current growth trend. Above the 1374 level and movement toward 1383 is initially possible.
Outlook
Today is going to be interesting I feel, not least as its Friday but also with the FTSE closing yesterday quite strongly and NFP at 13:30. We have both the 10 and 20 day Raff channels coinciding at 6609 today, but that would see quite a bullish push today with a few key resistance levels in the way first. On the daily chart I do still have the coral indicating a bearish trend and resistance at around the 6550 level. I have circled the 2 key’ish areas in Red below that I am looking at, though bear in mind the more general support/resistance levels listed below. We could potentially test the top of the Bianca channels yet again, and with the Raff channels also both sitting at 6610, a swing short at say 6560, with a very wide stop, and a drop fuelled by NFP could be good. I must admit though, I feel a bit more confident shorting off the top of these daily channel lines than thinking that we are in for a bullish few weeks.