US Equity markets edged higher on Friday as a weak US Non Farm Payrolls Report further raised expectations of more Federal Reserve stimulus at this week’s FOMC meeting. Payrolls rose 96k in August well below expectations of 130K with revisions detracting 41K jobs in June and July. Whilst the unemployment rate fell to 8.1% from 8.3% that was due to the participation rate falling to 63.5% from 63.7% as more people left the labor market. More stimulus is coming in China after President Hu approved a US$156bn infrastructure plan in an attempt to address the downward pressure still facing the Chinese economy. The Chinese data released last Saturday was mostly in line with expectations but again highlighted the slower pace of growth. All eyes this week will be on the FOMC meeting on Wednesday. Today is a quiet day for economic data with US Consumer Credit released at 1.30pm.

Sept S&P 500

Despite the very weak Payroll No released last Friday the S&P refused to go down as the market is now focused on QE3 which is expected to be announced on Wednesday. As long as we stay over 1420/1425 this market is short term bullish. Today I will raise my buy level to 1428/1432 with a 1424 stop. I still want to go short on any spike to the 1448/1453 level with a 1455 stop.

EURO/USD

I was stopped out of my small short position when the Euro closed over the now very important 1.2750 support area. Today even though we are very overbought I will look to go long on any dip to the 1.2730/1.2760 area with a 1.2710 stop. The Dollar is weaker on the expectation of more stimulus from the Fed and if we get a substantial announcement then the Euro will probably test 1.3000.

Sept DAX

The Dax looks tired to me! We traded up to my sell level on Friday and I went short at 7230. I will leave my stop at 7250 which is just above Fridays high. If we dip back to the 7150/7160 I will take profit and I will still be an aggressive buyer on any dip to the 7110/7130 with a tight 7095 stop.

Dec BUND

The Bund had a large move down ahead of Fridays Non Farm Payrolls before staging a nice rally in the afternoon. Today I will a buyer on any dip to 140.40/140.60 with a tight 140.20 stop, as I look for a retest of the important 141.60/141.80 resistance level.

USD/JPY

The USD/JPY dropped as the Dollar was weaker against every currency after Friday, including the YEN. I went long USD/JPY at 7840 and I will leave my stop at 7810 on this position. I will look to take profit on any spike to the 7880/7900 area.