The Institute for Supply Management’s non-manufacturing index increased to 58.6 from 56 the prior month, a report showed today. A measure of employment in non-manufacturing industries rose to 57 from 53.2 in July. Jobless claims declined by 9,000 to 323,000 in the week ended Aug. 31, less than the lowest forecast. The market now awaits the key jobs report, which will be issued tomorrow morning.
Equities: The SEP13 E-mini SP 500 (CME:ESU13) is almost at unchanged levels today, after highly upbeat economic data released this morning pertaining to jobs as well as manufacturing. The market is hovering near its 200-day EMA on a short term chart, and we believe that the market might try to make a run higher on a potential strong jobs number tomorrow. However, if this big jobs number happens tomorrow, the market might interpret this as bearish news as it may push the Fed to officially announce a tapering plan later this month. We believe this market will be higher than it is now by this time next year, but in the short term the market may oscillate sideways as the tapering gets digested. Our key medium term level to watch is 1684. If the market can’t stay above there, then we will continue to believe in the sideways trade.
Bonds: The SEP13 U.S. 30-year bonds (CBOT:ZBU13) are down 1 point once again! Today they are trading down to 128’27 on highly upbeat data from the U.S. economy today. We discussed the 126 level yesterday, and if we see a big jobs number tomorrow, this level could very well be approached. For now we have 130’14 as a key resistance level.
Commodities: Both gold and silver are down today on a stronger U.S. dollar, which is due to the strong U.S. economic data this morning. DEC13 gold (COMEX:GCZ13) is down $20 to $1,369, and is approaching its short term 200-EMA at $1,340. DEC13 corn is down again today, this time down $.095 to $4.60. We believe this contract will head to at least $4.45, possibly lower to $4.25. DEC13 cocoa futures continue to show strength, even after yesterday’s big rally, trading up $61 to $2,556. We believe this market could head much higher over the next several months.
Currencies: The SEP13 Swiss franc is the big loser in today’s FX markets, with the Franc/USD trading down 96 ticks to 105.87. We believe this market will head lower to the gap at 104.50, especially if we see a big jobs number tomorrow. As the economy heats up in Europe, China, and U.S. investors may be less likely to seek safe havens such as gold and Swiss franc. The SEP13 Aussie dollar is having a pullback today, trading down 36 ticks to 91.26. We still believe this currency could head higher to our key level of 92.60. The SEP13 USD is blasting higher today to 82.66, and we believe this index will gradually head to its yearly high of 85.