Hit the Mark Trading’s Brief Review of Overnight Market Action Setting the Tone for the Trading Day
ADP announced February new jobs payrolls increased by 298,000, which is phenomenal. Bonds tanked and US dollar strengthened on the news. Gold in tears below 1210 taking down Silver. This report is a pre-cursor to the Friday official government Employment Situation report, aka “non farm payrolls.”
As bonds fall, their interest rate rises causing greater competition for stocks. Just remember that!
Last night I reminded clients of Thursday’s ECB monetary policy statement 7:45AM ET followed by Count Draghi’s press conference. IF there is any inkling of the ECB changing or even thinking about changing policy…especially change in the language of the policy statement from ultra-loose, then currency traders might violently take Euro higher thinking “the floor is in for the Euro.”
You must be very careful with Euro on Thursday. Euro can move one way only to have Draghi’s press conference move it opposite. This is “event” style trading situation.
The last thing crude wants to see is a strong US dollar. Crude lower. Since 53 gave way, we look for 52 as the next battle ground for bulls/bears. Breaking below 52 suggests a potential chart event breaking the side-way channel.
Of course today is the crude report. Negative news not permitted to affect crude, such as inventory build. However, any whiff of positive news could push crude dramatically. Crude remains hands off for position traders, yet day traders have range for price action.
Gold is really interesting ignoring geopolitical tensions. The latest finds North Korea begging for attention with missile test fire in response to USA military maneuvers with South Korea. You have the USA deployment of THADD (Terminal High Altitude Area Defense) defense system in Korea. China warns USA of “consequences.”
I guess the market is numb when it comes to geopolitical hot spots and tensions.
Speaking of China, today we hear China logged the first trade deficit in 3 years as imports outweighed exports. Aussie dollar falls on the news as one would expect.
Beyond this…not much news overnight.
- MBA Mortgage Applications – 7:00 AM ET
- ADP Employment Report – 8:15 AM ET
- Productivity and Costs – 8:30 AM ET
- Wholesale Trade – 10:00 AM ET
- EIA Petroleum Status Report – 10:30 AM ET
- 10-Yr Note Auction – 1:00 PM ET
DAX, STOXX 50, and Nikkei 225 are all higher. We see ES and other USA equity index futures incrementally higher following. Looks like an up day at this point in time. TF has the most ground to make up if you are a TF trader.
Crude lower as described above.
Natural gas fills a gap. The test is underway for potential higher prices with the key a close over Monday’s high.
Gold and Silver lower. You simply are hard pressed to find a reason for either instrument since gold is not reacting to geopolitical events.
Grains lower on higher US dollar along with continued bearish news from South America calling for higher crop harvests in Soybeans and Corn with wonderful weather.
Softs lower thanks to higher US dollar.
All currencies lower against US dollar. Watch Pound for evidence of re-test of recent lows.
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