Equity markets and futures are recording gains with the S&P500 looking to push towards the magical and mystical 4,000 mark.
Commodities and oil are also positive on the day with the dollar mixed on this first session of a new quarter and Spring certainly in the air here in the UK.
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The holiday-shortened week makes it an odd start to April, though the US non-farm payrolls report may have something to say about that when it gets released into holiday-thin markets tomorrow afternoon at 12.30 GMT.
Jobs, jobs, jobs
The ramp-up in the vaccination rollout, declining infection rates and a further loosening of lockdown restriction are all set to deliver a boost to the widely watched monthly jobs data. Gains of 680k are expected in the headline figure, up from the 379k increase in February. The jobless rate is projected to slide further to 6% from 6.2% last month, which would be impressive if it comes alongside a rise in the participation rate. The latter would be an important sign of strength, while the return of service sector leisure and hospitality jobs could temper wage growth from the 5.3% figure in February.
There will be a shortened trading session in the bond markets and stocks markets will be closed so traders will be watching futures prices with some excitement. The latest PMI survey pointed to “strong” hiring across manufacturing and the “steepest overall jobs gains since December” while the ADP employment data hit a six-month high.
There is enough evidence it seems to suggest the US is ushering in the kind of economic resurgence that the bond markets have been pointing to for some weeks, especially with more stimulus in the pipeline.
That said, we shouldn’t forget that the world’s largest economy is still 9.5 million jobs short of early 2020…
OPEC+ decision on tap
The cartel is expected to extend its supply cuts by at least one additional month at its meeting today. The possibility of a longer extension or if Russia seeks to increase output faster are the main upside and downside risks for crude prices, and oil is currently trading up around 2% on the day, so are traders erring towards the former and greater than a one-month extension?
Prices are being supported by the 50-day moving average and bulls will want to push past $65 in Brent to get out of the messy trading seen over the last few weeks. The March lows around $60 offer strong support.
Loonie the leader
CAD, aka the loonie, is top of the major currency charts so far this year and we can understand why with pumped up oil prices and also the stronger-than expected January (and February preliminary) GDP print which was released yesterday. This is all reinforcing expectations that bond tapering will continue this month by the Bank of Canada even as some provinces reimpose social restrictions.
USD/CAD regained some ground after hitting a cycle low in mid-March, but after some sideways trading, again the 50-day moving average looks to be working its magic and capping any further upside. The 1.26 level looks like solid resistance and prices could rollover if they can beat yesterday’s low at 1.2539.
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