A Labor Department report today showed jobless claims decreased by 11,000 to 346,000 in the week ended June 1. The Chicago Board Options Exchange Volatility Index, or VIX, fell 0.7% today to 17.37.
Equities: The JUN13 E-mini S&P 500 is trading at approximately unchanged levels at 1608. The daily pivot point for this market is 1615, and the key downside target in our view is 1595. Tomorrow’s U.S. jobs report could have a big effect on this market. If there is a slightly higher than expected number, we think the market may make an initial burst higher, but then come right back down because at this point it seems that better economic numbers means sooner tapering of the stimulus.
Bonds: The bond market is very quiet today, which is somewhat normal on the day before a big monthly jobs report. We would not be surprised to see a large down move in the bond market if the jobs number comes out much higher than expected. We also are watching our target of 9842 downside target for the MAR16 Eurodollar interest rate futures. The JUN13 U.S. 10-year note is trading down 2 ticks to 130.16.
Commodities: Gold is up $4 to $1,402, and crude oil is up 1.6% to $95.25. As we have been saying, crude has been very resilient, not being able to stay below the $92 level. It is interesting to see this market act so strong, even in the face of a lot of data indicating big supply. Perhaps yesterday’s low supply number shocked the bears and we are seeing some short covering. We are also seeing natural gas take a dive today, down $0.13 to $3.87. The price decline comes on the back of a report showing a bigger-than-expected climb in last week’s U.S. supplies.
Currencies: The euro currency has exploded to the upside after the closely watched ECB meeting, which indicated a potential pick up in the recovery toward the end of this year. The market took this as very euro-positive news, combined with Latvia joining the Euro. Thus, the euro currency broke through the key 131 level and is now trading up 100 ticks to 131.87. Our key pivot level for this market is 131.15. We are also watching the Aussie dollar retrace all of last night’s losses and climb back to unchanged levels from yesterday’s close. Even though we believe the Aussie is in a down trend, we could see more short covering today and tomorrow.
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