Good morning. Well yesterday went according to plan to start with the drop of the pivot area but then the bulls staged a remarkable comeback didn’t they! I must admit though that it feels a bit false and I think it might just be getting driven up ready to fall on Friday from a higher level on NFP news, but for the moment (today really) it does look bullish. Its still eyes on the NFP tomorrow and also Syria after the Senate Foreign Relations Committee voted to authorize President Barack Obama to conduct a limited U.S. military operation in Syria, the first step toward congressional endorsement of the effort.
Asia Overnight from Bloomberg
Asian stocks rose for a sixth day, led by Indian equities, and the rupee strengthened after the nation’s new central bank governor outlined plans to bolster the financial industry. The euro weakened before central bank meetings in Europe and the U.K., while Treasuries fell.
The MSCI Asia Pacific Index of shares added 0.3 percent to 133.56 as of 2:17 p.m. in Tokyo, heading for its longest rally since December. Standard & Poor’s 500 Index (SPX) futures added 0.1 percent. India’s S&P BSE Sensex jumped 1.9 percent, while the rupee appreciated 1.2 percent against the dollar. The 10-year yield on Treasuries added one basis points to 2.91 percent, and the yen slid to the brink of 100 per dollar.
Reserve Bank of India Governor Raghuram Rajan announced plans to make it easier for banks to open new branches and lend to non-state sectors. The European Central Bank, the Bank of England and the Riksbank will all leave key rates unchanged today, according to economist surveys. U.S. jobs data tomorrow may provide clues to the Federal Reserve’s outlook for stimulus after its Beige Book survey showed consumers spent more on travel and tourism while manufacturing expanded. A U.S. Senate panel authorized a limited military strike in Syria.
“There’s optimism India’s new central bank will help get the house in order,” said Jonathan Ravelas, the chief market strategist at Manila-based BDO Unibank Inc. “These gains in emerging market assets indicate some recovery in investor confidence. It’s probably a temporary respite until the start of tapering in U.S. stimulus and the war in Syria worsens.”
The U.S. economy maintained a “modest to moderate” pace of growth from July to August, the Fed said yesterday in its Beige Book survey. The central bank, which has said cuts to its bond-buying program depend on continued improvement in the economy and job market, will decided to reduce purchases at its September meeting, according to 65 percent of economists surveyed by Bloomberg News Aug. 9-13.
Data today may show claims for jobless benefits fell to 330,000 last week from 331,000 in the previous period, according to a Bloomberg survey. Nonfarm payrolls data on Sept. 6 will probably show an increase of 180,000 in August, compared with an gain of 162,000 for July, another survey showed.
“U.S. payrolls is the key event, we’re looking at something around 190,000 and if we get that sort of number it reinforces the idea of Fed tapering occurring at the upcoming meeting,” Chris Green, a strategist at First NZ Capital Ltd., a brokerage and wealth-management firm, said from Auckland.
The Dax came fairly close to the 8070 support level mentioned yesterday before a pretty impressive bounce as well. Further movement today above 8212 has target 8252 with secondary, if exceeded, at an unlikely looking 8313 points.
The S&P is looking at a possible 1664 if it can get and hold above 1656. After that 1669 is the next resistance level. To go bearish a break below 1640 would open up some downside again, and probably quite a lot (the sub 1600 I mentioned yesterday)
Met the levels mentioned yesterday but something odd happened with the price of the metal toward the session close on Wednesday. There’s now a risk of any weakness below 1385 ensuring a trip to 1366 USD
There’s no denying that in the short term its pretty bullish with yesterday’s climb off the lows, however the bulls still have their work cut out as we are still near the top of the various daily channels – 6530/50 area for the Raffs, 6523 and 6545 for Bianca, as you can see below. 6480 marks the top of the declining trend line since the beginning of August so breaking out from here could test those daily channels and with pre market looking at opening about 6494 its looking likely that the bulls will take the FTSE a bit higher yet. I have plotted the arrows below based on 6480 holding and a test of the Bianca 10 day channel at 6523 but as mentioned below we may see those Raff levels too. Generally I think today will have a slight bullish bias with a case of “buy the rumour” for a decent NFP figure, but with some decent longer term resistance levels not far away there are some decent shorting locations too.