Jobless claims decreased by 5,000 to 343,000 in the week ended June 29 from a revised 348,000 in the prior period. The ADP report showed the U.S. boosted employment by 188,000 workers in June. Egyptian President Mohamed Mursi defied protests demanding his resignation.
Equities: The SEP13 E-mini S&P 500 (CME:ESU13) is down 5 points this morning to 1602. The economic data which was released this morning, specifically the ADP report, was positive, but this market is still down slightly on the day. We believe the market is indeed concerned about the instability in Egypt, and also concerned that the good economic data will cause the Fed to taper the stimulus program later this year, thus potentially causing headwinds for the market and economy. Generally, the market is staying right around the key 1600 level before the big jobs report on Friday. The sentiment for U.S. business seems to be very high, so we still believe the market wants to head higher.
Bonds: The interest rate market continues to be quiet leading up to the non-farm payrolls report on Friday. Even with the 188K jobs figure released this morning, the bond market is not down a lot, likely due to a safe-haven bid with the goings-on in Egypt. We believe the bond market is not done going down yet, and is potentially waiting for another solid cue to make another big leg down in price.
Currencies: The Aussie dollar (FOREX:AUDUSD) looks weak to us, and is trading below our key volume pivot level of 90.30. If this currency stays below 90.30, we have our next downside target at 89.17. The US Dollar Index is in a slight pullback today, trading down 18 ticks to 83.58, still above our key pivot of 83.40. We believe the USD will rally sharply if we get a big jobs number on Friday. The Euro (FOREX:EURUSD) is also struggling today, holding below the 1.30 level, likely due to concerns about Portugal. Also, recent inflation data from Europe came in low, thus probably causing the market to believe Draghi could be more dovish for a longer period of time.
Commodities: Gold (COMEX:GCQ13) is up $12 to $1,256, after dipping down to below $1,240 last night. We believe gold is in a range trade environment at this point. $1,230 is our key line in the sand for this market. If gold gets below $1,230, it could test $1,200, and even the low of $1,179. If gold stays above $1,230, it could test the $1,275 level. We believe gold is also supported today by the Egypt circumstances. We focus on crude oil (NYMEX:CLQ13). Crude oil has broken above a key level of $100, and now is trading up $2.37 to $101.98. Its anyone’s guess as to how high crude oil can go when crisis erupts in the Middle East. We believe this is a key breakout move, and would not be surprised to see crude head higher from here. Our next short term target is $103.40.
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