4 Apr: Markets steady but sentiment positive on US/China progress. Thin calendar ahead, waiting on tomorrow’s NFP.

By | April 4, 2019

 

Most products have been fairly stable on Wednesday, confined to a range while waiting on tomorrow’s US employment figures. Risk appetite remains mildly positive following on from yesterday’s positive Chinese data, which has been backed up by some optimism on the US-China trade negotiations, which continue in Washington today. A US official commented that a deal is 90% done, and this has underpinned the industrial metals, which in turn is assisting the positive risk sentiment. The principal winner on Thursday has been the Aud$, which had a good session following on from yesterday’s positive Australian Retail Sales figure, and appears as though it may be forming a medium term base. Keep an eye on Iron Ore (+3%) and Copper (+1.2%), as further gains here will help the Aud$.

On the other side of the coin, in terms of data, the US ADP report showed an increase in job growth of just 129k in the private sector in March, well below expectation of 184k, the smallest job increase in 18 months. Earlier in the session, the UK services PMI dropped to 48.9 in March, down from 51.3 and missed expectation of 51.3, making the first contraction reading since July 2016. On top of the never-ending Brexit negotiations, Sterling would appear headed lower although it is currently underpinned by hopes of a soft Brexit following the meeting today of the UK PM, May and the leader of the opposition, Corbyn. BOE Governor Carney has warned of the chances of a no-deal Brexit, if no progress is made by 12 April, in which case Sterling would head much lower.

The US$ is mildly weaker, with the DXY at 97.10, while stocks and the precious metals are pretty much flat. WTI has traded a 62/63 range and is settling in the middle, not too far removed from the previous close.

Thursday will be a very quiet session in terms of data, and traders seem likely to stand aside until tomorrow’s jobs data. Asia has nothing to move the markets, while Europe will only have the ECB Minutes and the German Factory Orders (exp 0.3%mm – Feb, -5.4%yy). The US will be equally thin, with just the weekly Jobless Claims and a couple of Fed speakers, Williams/Mester. Tomorrow’s NFP number is expected to be +175K, AHE; 0.3%, AWH; 34.5, Headline rate; 3.8%.

Economic data highlights will include:

Thur: NZ Commodity Price Index, ECB Minutes, German Factory Orders, US Jobless Claims

Market moves, in brief:

FX: DXY 97.13 (-0.19%)

Bonds: US10Y; 2.523% (+1.64%), German 10Y; 0.006% (+112%), UK 10Y; 1.087% (8.0%), Australian 10Y; 1.85% (+1.60%), NZ 10Y; 1.915% (2.68 %), China 10Y; 3.25% (2.53%)

Stock Indices: DJI; +0.15%, S+P; +0.21%, NASDAQ; 0.60%, EUStoxx50; +1.02%, FTSE100; +0.37%, Shanghai Composite; +1.24%,

Metals: Gold 1290 oz (-0.16%), Silver 15.14 oz (+0.14%), Copper 2.9425 lb (1.17%), Iron Ore 92.15 per tonne (2.96%),

Oil: WTI 62.43 pb (-0.19%)

CURRENCIES
EURUSD: 1.1238
Res  1.1255  1.1280  1.1300
Sup  1.1215  1.1200  1.1175
USDJPY: 111.49
Res  111.70  111.90  112.15
Sup  111.10  110.80  110.55
GBPUSD: 1.3158
Res  1.3195  1.3230  1.3270
Sup  1.3120  1.3080  1.3040
USDCHF: 0.9979
Res  1.0000  1.0020  1.0040
Sup  0.9950  0.9930  0.9905
AUDUSD: 0.7112
Res  0.7130  0.7145  0.7160
Sup  0.7100  0.7085  0.7070
NZDUSD: 0.6778
Res  0.6800  0.6825  0.6845
Sup  0.6760  0.6740  0.6720
INDICES / COMMODITIES
S&P.fs: 2878.53
Res  2885.00  2900.00  2915.00
Sup  2870.00  2860.00  2850.00
DJ30.fs: 26213.50
Res  26280.00  26400.00  26500.00
Sup  26110.00  25990.00  25895.00
SPI200.fs: 6270
Res  6285  6300  6315
Sup  6250  6235  6220
XAUUSD: 1290.15
Res  1295.00  1300.00  1305.00
Sup  1285.00  1280.00  1275.00
XAGUSD: 15.13
Res  15.20  15.30  15.40
Sup  15.00  14.90  14.80
WTI.fs: 62.46
Res  63.00  64.10  65.10
Sup  62.00  61.20  60.40