The U.S. Non-Farm Payroll Report came out worse than expected. Traders were looking for a loss of between 175,000 and 225,000 jobs. The actual number showed a loss of 263,000 jobs. The biggest job losses occurred in construction, manufacturing, retail and the government. Healthcare was positive.
The U.S. Dollar is gaining ground against all major currencies except the Japanese Yen. Investors are looking at this report as a sign that the government stimulus plan may not be working. Traders are keeping away from higher yielding assets and seeking the safety of the Dollar.
The Dollar is posting its strongest gains versus the British Pound and the Canadian Dollar. The main trend is down in the British Pound and traders expect this currency to reach 1.5200 before strong buyers step in. The charts indicate plenty of room to the downside. Lower equity and crude oil markets are helping to pressure the Canadian Dollar.
The Euro is also down sharply. Traders are saying that government stimulus is not working and staying away from the more risky assets. The perception is if the U.S. economy is not on track to recovery then the Euro Zone is not going to improve.
The Dollar is trading lower against the Japanese Yen and Swiss Franc. This could be traders seeking safety in these two currencies.
Traders should not expect the Dollar to go straight up today, but instead should watch for steady upside pressure. Volatility could be high and there may be some violent counter-trend knee-jerk reactions throughout the day.
U.S. equity markets are called to open sharply lower. The September E-mini S&P 500 is in a position to test 1010.00 where it could see a technical bounce. 1020.00 is now a new resistance price followed by 1031.00. Traders are cashing in on the perception that the U.S. economic recovery will not be as strong as previously estimated. Today’s bearish employment report is also another sign that the equity prices are too far ahead of the economy.
December Treasury Bonds and Notes are trading sharply higher following the release of the bearish U.S. employment report. Traders are looking for yields to remain under pressure as long as the economy continues to weaken. In addition, traders are showing increased demand for lower risk assets.
With the U.S. Dollar trading higher, December Gold and Silver are feeling downside pressure. Now that it looks like these two markets have made there secondary lower tops, expectations are for lower prices. The first downside target is $978.80 in the December Gold.
The weaker economy and the stronger Dollar are expected to keep the downside pressure on December Crude Oil. A weak economy is likely to keep demand low and oil inventories high.
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