Technical Analysis

The CAD is the strongest and the NZD is the weakest as the North American session begins

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The CAD is the strongest and the NZD is the weakest as the North American session begins. The focus is will be on the US jobs report which will be released at 8:30 AM ET. Adam’s preview can be found here.

The snapshot of the expectations shows:

  • Consensus estimate +180K (range +100 to +275K). 30K are thought to be returning strike workers.
  • Private +158K
  • October +150K
  • Unemployment rate consensus estimate: 3.9% vs 3.9% prior
  • Participation rate consensus 62.7% prior
  • Prior underemployment U6 prior 7.2%
  • Avg hourly earnings y/y exp +4.0% y/y vs +4.1% prior
  • Avg hourly earnings m/m exp +0.3% vs +0.2% prior
  • Avg weekly hours exp 34.3 vs 34.3 prior

What is at stake? The markets are looking ahead and see Fed cuts as early as March. The market prices are now implying a:

  • 10% chance for a January cut
  • 58% chance for a March cut
  • 88% chance for a May cut

The market has priced in 130 basis points of cuts in 2024.

I am not sure it can go any further. If it does, it means a slower economy (recession) with much higher unemployment. If so, the stocks may be in trouble. The Nasdaq closed only 19 points from a new 2023 high close. Something has to give.

Oil prices are higher from near six-month lows as market traders anticipate the U.S. nonfarm payrolls data and its potential impact on the American economy and interest rates. The prices were also supported by Saudi Arabia and Russia urging OPEC+ members to adhere to output cuts. Focus most recently has been anticipated weaker demand from slower global growth.

A snapshot of the markets to kickstart the North American session shows:

  • Crude oil is trading up $1.39 or 2.0% at $70.74. At this time yesterday, the price was at $69.80
  • Spot gold is trading down $-0.90 or -0.04% at $2027.45. At this time yesterday, the price is at $2032.15
  • Spot silver is trading down 4.8 cents or -0.20% at $23.74. At this time yesterday, the price was at $23.89
  • Bitcoin is trading at 43,007 $54. At this time yesterday, the price was way down at $43,292

In the US stock market, the major indices are implying a lower opening after closing higher across-the-board yesterday. The Nasdaq index is now marginally higher on the week. The S&P and Dow Industrial Average are still on pace for a lower close for the week snapping a five-week winning streak:

  • Dow Industrial Average futures are implying a loss of -17.38 points . Yesterday the Dow Industrial Average rose 62.95 points or 0.17%. For the week the index is down -0.35%.
  • S&P index futures are implying a loss of -3 points. Yesterday the S&P index rose 36.23 points or 0.80%. For the week the index is down -0.20%.
  • NASDAQ index futures are implying a decline of -37 points. Yesterday the Nasdaq Index rose 193.28 points or 1.37%. For the week the index is up 0.24%

In the European equity markets, the major indices are trading higher.

  • German DAX, +0.24%. For the week the index is up 1.54%.
  • France’s CAC, +0.70%. For the week the decks is up 1.78%
  • UK’s FTSE 100, +0.12% %. For the week the index is unchanged
  • Spain’s Ibex, +0.22%. For the week the index up 0.08%
  • Italy’s FTSE MIB, +0.12% (10 minute delay).

In the Asia Pacific market, major indices were mostly lower. For the week, the indices were lower with the exception of the Australia S&P/ASX index:

  • Japan’s Nikkei index, -1.68%.. For the week the index fell -3.36%
  • China’s Shanghai Composite Index, +0.11%. For the week the index is down -2.04%
  • Hong Kong’s Hang Seng index, -0.07%. For the weekly index was down -2.95%.
  • Australia’s S&P/ASX index, +0.30%. For the week the index was up 1.7%

In the US debt market, yields are trading higher:

  • US 2Y T-NOTE: 4.630% +5.1 basis points. At this time yesterday, the yield was at 4.617%
  • US 5Y T-NOTE: 4.174% +6.2 basis points. At this time yesterday, the yield was at 4.152%
  • US 10Y T-NOTE: 4.179 percent +5.1 basis points. At this time yesterday, the yield was at 4.192%
  • US 30Y BOND: 4.277 percent +3.1 basis points. At this time yesterday, the yield was at 4.262%
  • 2 – 10-year spread is trading at -45.1 basis points. At this time yesterday, the spread was at -46.0 basis points
  • 2 – 30 year spread is trading at – -35.7 basis points. At this time yesterday, the spread was at -35.6 basis points

In the European debt market, benchmark 10-year yields are trading higher:

This article was written by Greg Michalowski at www.forexlive.com. Source