There was evidently nothing for the US Dollar in what was a ‘’goldilocks’’ US Employment Report on Friday. Fears of 4 rates hikes from the Fed this year have receded while risk sentiment is back firmly in the ascendency for now at least. This turned recent mild headwinds into tailwinds for the AUD, making it the second strongest currency on Friday and the best performing G10 currency on the week with a gain of just over 1%. Further gains are in prospect against this backdrop, one caveat to note being that iron ore and coal prices continued to fall back on Friday with iron ore now off 5.7% over the week, steaming coal down 3.4% and coking coal by 2%.

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Friday’s US Payrolls Report combined a big upside surprise on employment of 313k  another 56k of upwards revisions on top, a downside surprise on Average Earnings (down to 2.6% y/y) and Unemployment holding above 4% thanks to a 0.3% jump in the labour participation rate. The report goes some way to easing concerns that the March FOMC could see a lift to the Feds median ‘’dots’’, even if it does nothing to cast doubts on the likelihood of another step along the gradual tightening path. One caveat to this is that financial conditions are now little changed on where they were when the Fed last raised rates in mid-December. Too-easy conditions are a concern to at least some on the FOMC.

Fed speak on Friday saw Chicago Fed President Charles Evans (dove) saying he prefers not to raise rates in March but rather wait and see more inflation news before going again (he will be in a minority), while Boston Fed President Eric Rosengren repeated that he is still inclined toward four hikes this year (he might be right, but the Fed is now unlikely to signal this next week).

Equities jumped out of the box on the payrolls report and proceeded to rally throughout the US session, the S&P closing +1.7% for a gain of 3.5% on the week and over 4% YTD. The NASDAQ is up over 4% on the week and now fully recovered from the February drop to post a new record high. The VIX dropped 1.9 points to 14.6 and its lowest since 2nd February.

In FX, it was NOK, AUD and CAD in that order that benefited from the risk-on tone, plus too a sharp rebound in oil prices ($1.90). The JPY maintained the losses seen during the London time zone on news of Trump’s willingness to accept the invitation delivered by the South Korean ambassador for Kim Jong-un for the leaders to meet. EUR/USD finished fairly flat after initially rallying in the two hours after the US employment report. Earlier in the day, weaker than expected German and French Industrial Production figures failed to impact.

US Treasury yields were higher across the curve in a mild bear steepener (on the day and week) even if the employment report has eased concerns that the March FOMC meeting could result in higher median ‘’dots’’, the scale of the jump in payrolls seemingly triumphing over the other components of the report. Or maybe it’s just set-up in front of upcoming supply (the Treasury will auction $28bn of 3-year notes and $21bn worth of 10s this evening along with $96bn worth of Treasury bills, and then $13bn of 30-year bonds on Wednesday).

In commodities, oil jumped by $1.90 for both Brent and WTI crude. Baker Hughes reported active US oil rigs fell by four to 796 this week which helped, as did strong risk positive sentiment and news of exemptions to steel and aluminium tariffs. Most hard commodities were also higher, the exceptions being iron ore, coking and steaming coal. The further $1 fall in iron ore brings the fall on the week to $4.35 or 5.7%.

President Trump tweeted on Friday night that”Spoke to PM @TurnbullMalcolm of Australia. He is committed to having a very fair and reciprocal military and trade relationship. Working very quickly on a security agreement so we don’t have to impose steel or aluminum (sic) tariffs on our ally, the great nation of Australia!”

This morning on the Economic Front we have no data of note due form either the UK or the Euro-Zone while the only release from the US is Employment Trends at 2.00 pm and the Monthly Budget Statement at 6.00 pm.

March S&P 500

I mentioned in Friday’s Commentary that the 2740 level is key resistance and that a close above this level last Friday would be significant. After the Payrolls were released the market just went straight up as more and more shorts got slammed with the S&P now trading 60 points above this key level at 2800 this morning. Thankfully we had no sell levels across any of the five Indices that I cover each day but unfortunately we did not get a chance to buy the S&P and are still flat. Today I will move my buy level higher to 2758/2770 with a wider 2749 stop. With the McClellan Oscillator closing near overbought levels at +160 on Friday I will now be a small seller on any further rally to 2809/2819 with a 2825 stop.


Unfortunately the Euro just missed my second buy level at 1.2270 on Friday with a 1.2272 low print before rallying this morning to my 1.2340 T/P level on my original 1.2320 long position from late Thursday and I am now flat. As long as the Euro does not break and close below 1.2250 I will continue the dip and today I will now look to buy the market again on any dip lower to 1.2265/1.2305 with a 1.2235 stop. I still do not want to be short the Euro at this time.

June Dollar Index

No change as I am still a buyer on any dip lower to 89.35/89.75 with the same 88.95 stop.

March DAX

For the second consecutive trading session the DAX again just missed my buy level before rallying and I am still flat. The DAX has key support at 12335 and today I will now raise my buy level to 12280/12340 with a 12220 stop. I still do not want to be short the DAX at this time.

March FTSE

As long as the FTSE can hold the 7185 support level then the market should move higher. However the FTSE continues to be the weakest of the Indices that I cover and caution is warranted. I am still flat the market and today I will move my buy level slightly higher to 7170/7200 with a 7140 stop. I still do not want to be short the FTSE at this time.

Dow Rolling Contract

The Dow came within 70 points of my 24760 buy level on Friday before having a huge 670 point rally to trade above 25500 this morning. It is incredible that no matter what bad news is thrown at this market it continues to be a buy on dips and as long as we hold the February low at 23300 this will continue to be the case. However for this rally to continue we need to break and close above the key 25700/25850 resistance level. Today I will be a seller in this area with a 25930 tight stop. My only interest in buying the Dow is on a dip lower to 24850/25050 with a 24700 stop. Remember a break and close below 24750 is a short-term sell signal.


Incredibly the NASDAQ closed at new all-time highs on Friday. However Bloomberg reports an eye-catching fact about the quality of the NASDAQ’s advance from February 9 : 25% of the companies in the NASDAQ 100 have fallen since this low on February 9. This compares to just 15% of NASDAQ 100 companies declining in the 12 months leading up to the January 26 high. Just five stocks account for half of the entire upward push since the February 9 low: Apple, Amazon, Microsoft, Alphabet (Google) and Intel. This rally is demonstrably narrow which is usually not a healthy sign. However we have to respect the price action but still keep a close eye on the internals of the market. I am still flat the NASDAQ and today I will now raise my buy level to 6950/7010 with a 6895 stop.


I am still flat the Bund which just missed my buy level on Friday before rallying into the close. With the large US Treasury Auctions this evening I will now lower my buy level slightly to 156.20/156.60 with a 155.90 stop.

Gold Rolling Contract

No change as my only interest in buying Gold is on a dip lower to 1298/1308 with a 1299 stop.

Silver Rolling Contract

I am still long Silver from last week at 16.66 with the same 17.05 T/P level and 15.90 stop. I will continue to look to add to this position on any move lower to 16.25 and if this happens I will then lower my T/P level to 16.70.