Good morning. Well that initial rise just kept going and going yesterday, and the short got stopped out quite quickly. Markets were fairly buoyant with the ECB press conference though its now all eyes on NFP later at 13:30. Asia has stayed fairly flat overnight and the S&P hovered around 2100 for most of yesterday – neither really following the rise on the Europeans. We didn’t have too much of a drop off the 10 day Raff so I have closed that short for a small gain, if it was going to drop it would have done it sooner. Probably get a fairly upbeat day I expect, though the Dax 30minute chart could be on the cusp of changing to bearish….
US & Asia Overnight from Bloomberg
(Bloomberg) — Asian stocks rose while the dollar held gains, with a gauge measuring the U.S. currency against major peers headed for its biggest weekly advance since January, before data on the U.S. jobs market. Oil in New York climbed.
The MSCI Asia Pacific Index added 0.7 percent by 2:23 p.m. in Tokyo, paring its first drop in five weeks. Japan’s Topix index is heading for a more-than seven-year high. Standard & Poor’s 500 Index futures were little changed after the gauge rose for the first time in three days. The Bloomberg Dollar Spot Index is up 1 percent this week, with the greenback near an 11-year high to the euro. U.S. oil has gained 2.6 percent this week.
A gauge of global equities is less than 1 percent from an intraday record struck Feb. 26 after the European Central Bank clarified a plan for buying 60 billion euro ($66 billion) of assets a month from Monday. Friday’s payrolls report may offer clues to the timing of U.S. rate increases, after new claims for jobless benefits rose to a nine-month high. Diverging outlooks of the U.S. and other countries have seen the dollar rise against most global peers this year.
“The euro’s sharp plunge is elevating the dollar,” Takeru Kurokawa, an analyst in Tokyo at Ueda Harlow Ltd., which provides margin-trading services, wrote in a note to clients. “Payrolls within expectations should be dollar supportive.”
Bond Buying
The euro was little changed at $1.1027 after touching $1.0988 Thursday, its weakest intraday level since September 2003. The currency is headed for a weekly loss of 1.5 percent, also its third straight retreat. European stocks surged Thursday, with Germany’s DAX Index climbing to a record.
The ECB will buy assets “in any case until we see a sustained adjustment in the path of inflation” toward the bank’s aim, Draghi told reporters on Thursday. The purchases will include securities with negative yields up to the bank’s deposit rate of minus 0.2 percent.
ECB officials also revised higher projections for economic growth, partly due to a drop in oil prices, and expect gross domestic product to expand 1.5 percent this year, 1.9 percent in 2016 and 2.1 percent in 2017.
The Topix rose 0.8 percent toward its highest close since December 2007. The Nikkei 225 Stock Average jumped 0.9 percent to an almost 15-year high as Uny Group Holdings Co. climbed 4.6 percent after FamilyMart Co., Japan’s third-largest convenience store operator, said it’s in talks with the department store chain about a possible merger.
Asian Stocks
The Kospi index in Seoul gained 0.7 percent while New Zealand’s NZX 50 Index rose 0.8 percent after reaching a record earlier in the week. Australia’s S&P/ASX 200 Index was little changed.
The Australian dollar strengthened 0.3 percent to 78.03 U.S. cents and is little changed for the week. The Australian dollar was about 2 percent overvalued last month and could still be considered too high, according to Reserve Bank of Australia documents. The RBA said that 39 of 75 central banks examined had either publicly declared or appeared to hold Australian dollars in their reserves, up from 34 two years ago, according to a separate draft document from February.
China Outlook
The Hang Seng Index fluctuated in Hong Kong and a gauge of Chinese companies listed in the city added 0.2 percent after sinking more than 5 percent in the previous three trading days.
China’s yuan was little changed at 6.2647 to the greenback today. The People’s Bank of China has weakened the currency’s reference rate versus the dollar for the last four weeks in a row, the longest streak since May. The central bank cut interest rates for the second time in three months last weekend.
The 2015 growth goal for Asia’s largest economy was set at about 7 percent on Thursday, down from last year’s target of about 7.5 percent. Data due Sunday may show exports swung back to growth in February, while imports dropped for a fourth straight month, according to economists surveyed by Bloomberg.
Snowfall in parts of the U.S. may have caused some workers to have been temporarily dismissed, leading to the increase in unemployment claim filings for last week. Friday’s jobs data may show employers added 235,000 workers to nonfarm payrolls in February, while the unemployment rate is expected to drop to 5.6 percent, matching a more than six-year low.
Yen Weakness
The Fed has said it will remain patient when it comes to boosting borrowing costs, even as the economy shows signs of improvement. The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, was little changed. The yen added 0.1 percent to 120.02 per dollar, headed for a third straight weekly drop.
Gold was little changed at $1,198.59 an ounce today, heading for its fifth decline in six weeks. A measure of 30-day historic volatility in the U.S. dollar-denominated spot price has fallen to the lowest since November. While it’s up just 1.3 percent in dollar terms this year, the yellow metal has risen 11 percent in euros, 6 percent in Australian dollars and 2.3 percent when priced in China’s yuan.
West Texas Intermediate crude added 0.6 percent to $51.08 a barrel after sliding 1.5 percent on Thursday. While WTI is up this week, Brent crude has lost 2.6 percent. The benchmark for more than half the world’s oil was 0.8 percent higher at $60.95 in London today. [Ref]
FTSE Outlook
Todays pivot is 6947 so I expect we may get some initial support there, especially as we didn’t get too much bearishness off the 6970 Raff channel yesterday. That said, the 30minute chart has certainly weakened a bit, with the EMAs brewing for a cross (and also on the Dax too), so if it broke the pivot then 6931 (200ema) would be the next level to watch. Support below here is 6895 and 6864, the most recent low. Resistance is 6969 initially, and there are a cluster of PRT resistance lines on the 30minute chart there, with the 10 day Bianca at 6979 – so might be a spot to reload a short for any dip to 6931. Above 6979 we have 6995 and 7007 as the next levels to watch. Obviously its NFP Friday so a little bit of caution is advisable. The 10 day Raff has widened now, with resistance at the 7001 and support at 6860 – worth small trades off these levels if seen though they are not in the trade plan below.