European equities are set edge a fraction higher on the open. The current environment isn’t swaying traders in any clear direction and there’s a little apprehension creeping in as we approach todays ADP and Fridays Non Farms employment figures. With the labour market recovery one of the key tenets in the Feds justification for a rate hike, if we get another round of steady gains and the expectation of a rate hike crystallises, don’t expect markets to be so noncommittal.
Although yesterday’s factory orders data was in line with expectations, the Dow Jones dropped 77 points to close at 17,515. The index was dragged down by Apple which fell below the 200 day moving average for the first time since September 2013 on weak iPhones sales. In addition, Federal Reserve Bank of Atlanta President Dennis Lockhart said ‘the economy is ripe for an interest rate increase’.
With the US jobs report likely to be the main focus this week, the greenback continued to appreciate versus the euro, gaining 66 pips to 1.0889. Later today we’ll have a string of manufacturing data coming out of Europe which should offer direction to the shared currency. However trade balance in the US and the ADP non-farm employment change will be closely scrutinised.
The sentiment that the selloff in crude oil was overdone has attracted bargain hunters who pushed WTI prices 64 cents higher to $45.96. There’s also some speculation the todays oil inventories figure will show a continuing depletion in inventories. Gold prices rebounded $3.7 to $1088.00 but are still at risk of further declines especially if the US non-farm payrolls numbers surpass predictions.
Contributed by Capital Spreads
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