After some trepidation about forecasts for Friday’s Non-Farm Payrolls Report, in the wake of the weaker than expected ADP Report and a rise in the Jobless Claims, most of the report underwhelmed the market on its release. Payrolls notched up a disappointing 88k gain, well shy of the 190k consensus headline growth and below the 100k bottom of the range of forecasts. The household survey was soft with a 206k drop in the month, reversing a 170k rise in February. One headline that was better was the 0.1% drop in the Unemployment Rate to 7.6%.
On the other hand, European data was in line or better than expectations. Euro-Zone Retail sales dipped 0.3% which was in line with expectations but encouragingly, German Factory Orders rose 2.3% in February thus countering January’s 1.6% decline. The March PMI points to a return to softness. The Portuguese Government over the weekend has approved new austerity measures after it’s High Court struck down some of it’s existing measures. The big FX mover is the continuing decline in the Japenese Yen in the wake of ramped up QE from the BOJ with USD/JPY now well over 98.
Today is a quiet one for economic data. This morning we have German Industrial Production and Euro-Zone Sentix Investor Confidence whilst we have no data of note from the US. Later today the Feds Pinalto speaks on the Economy in Florida.
June S&P 500
The S&P trade worked well on Friday as after the weaker than expected Payroll No the market traded down to a low of 1533.25 before having a nice rally. I bought it at 1536 and I took a gain at 1545 before the close and I am now flat. This 1530/1534 is now key support and as long as the market stays over this level we are still bullish, however a break and close below here will be short term bearish. I am impressed at the way the market was able to rebound from this weak payroll data and you have to respect a market that will not decline on bad news. Today I will be a small buyer on any weakness to 1538/1543 with a 1529 stop. I have to leave a wider stop given how significant the 1530/1534 support is and thus I will only trade in smaller size. I will also look to sell any rally to the 1559/1563 area with a 1569 stop which is just above contract highs made last week.
Euro/USD
I did not get a chance to trade the Euro as it gapped higher after the release of the payroll data and as I said on Friday, I preferred to have no position ahead of the release of the data and then react afterwards. I am still flat the Euro and I have to respect the way that it reversed after Dragi’s Press conference on Thursday.
This 1.2750 support from where the Euro rallied strongly on Thursday is now key and as long as we stay over this level it may eventually trade back to the 1.3250/1.3300 area first before going lower. This morning I am a small buyer from 1.2960/1.2990 with a 1.2940 stop. I do not want to be short the Euro at this time.
June BUND
After the payroll data was released, the Bund traded up to a high of 146.54 before sellers returned. The Bund is struggling over this 146.00 level and I went short at 146.40. I will leave my stop the same at 146.70 as I will give it one more day to sell off. I do not want to be long the Bund at these levels.
June DAX
Similar to the Euro, the Dax sold off ahead of Friday’s Non Farm Payrolls and as a result I had no position and I am still flat. The Dax has surprised me with how weak it is trading and is now one of the worst performing equity markets this year. Today I will be a small buyer on any dip to 7625/7650 with a 7595 stop. The Dax is now at the bottom of it’s Bollinger Band and Williams Index and as a result I do not want to be short at this time.
June FTSE
The FTSE also traded down through my buy level ahead of Friday’s data and as a result I did not put on a trade and I am still flat. It needs to break back above 6240 for me to buy the market but it has had a nice rally off the 6160 low made on Friday. If the FTSE trades over 6240 I will be a buyer in small with a 6210 stop.
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