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Market Brief

The analysis of what is going wrong within the USA’s jobs market has begun. Currently, the front runner for why the NFP number was an extreme miss is being touted as the Government stimulus is enabling low-paid workers to stay away from the businesses that have refused to inflate the workers’ wages for the last few decades. There is also a case that jobs advertised are deliberately not being filled, as having a company’s name on a recruiter’s site is a form of cheap advertising. There has been anecdotal evidence of employees admitting that their company has been advertising the same job for over a year with no intention of filling it, as they aren’t interviewing any applicants. The third possible reason is that more of the Boomer generation are deciding to retire. It is probably a mixture of all 3. The US dollar had dropped significantly on Friday and it closed at its lows signaling a further drop to come.

The US indices rose on the back of the bad number with the Dow Jones Industrial Average and S&P500 hitting all-time new highs, with the S&P500 closing higher for 7 straight weeks now. The reason for the rise is probably the market front running ever more stimulus from the US Treasury, as they will have to support those that are still unemployed. There is also the Feds analysis that the inflationary pressures are transitory and that they will have to keep their QE program running with low-interest rates for some time to come. Currently, the Fed estimates that they won’t be able to raise interest rates until 2024. The evidence suggests though the longer they do QE the longer the deflationary pressures will remain.

US dollar index has significant targets lower at the daily previous swing lows of $89.66 and $89.15 but is currently just able to keep its head above the 90.00 level.

The depreciating US dollar was able to support Oil prices even with a suspected Russian cyber-attack on the US’s largest refined products pipeline. The Colonial Pipeline has been attacked by a ransomware virus and has caused the US government to declare a state of emergency, which then allows for the use of tankers to distribute the refined oil to affected areas. WTI is starting the London session in the green and up nearly 1.0%, following a reversal of the low print of $63.80 on Friday. The price action of Friday was a test of a previous consolidation range, and now with that tested, I expect last Wednesday’s highs to be targeted as the commodity complex marches higher.

Copper jumped over 3.0% in overnight trading from the weeks open on the back of Glencore’s CEO saying that the metal needs to rise another 50% higher to encourage enough new mined supply to meet demand. Whether or not the industry could bring enough product to market soon is debatable as it can take years to get a mine on stream and countries like Chile are majorly disrupted by COVID-19 still.

The ActivTrader Sentiment indicator is showing that 69% of traders remain bearish of the EURUSD as the single currency enters a potential supply zone around the 1.2150-1.2230 price levels. Last week’s price action was very bullish, and the currency pair ended the week at the highs, whilst also printing a bullish outside candle. As the price has already breached last week’s high, the odds are in favour of a continuation to the upside.

The GBPUSD pair has started this week very bullish and is accelerating higher as it takes the liquidity above daily swing highs. The next logical target is 1.4240 now price is above the big psychological level of 1.4000 and it moves away from the 300 pips trading range it had been in since February.

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