US ISM Manufacturing PMI climbed to 64.7 beating market expectations in March from February’s 60.8. The Supply Management (ISM) reported its highest reading since December of 1983. There are still supply restrictions and covid-19 cases will cause more disruptions ahead, but today's number was super bullish for the overall market sentiment.
Combining stimulus plans unveiled by US President Biden last night with this good ISM data has seen S&P 500 hit a fresh intraday high, topping 4,000 for the 1st time on record.
The Nasdaq is attempting to catch up and within the first hour of the US session was up more than 1% with tech shares leading the gains. Microsoft was up 2.62% at the London close with Apple and Amazon both up over 1%.
The US Initial Jobless claims were disappointing for this week, breaching the 700k level once again. However, US Labor Department revised data from last week making for a more bullish jobs report. The number of Americans filing for unemployment benefits rose to 719k in the week ended March 27th. The market has looked through this data and considering the vaccine rollout and the 4-week moving average jobless claims which has coincidentally also declined to 719k, this figure is the lowest for 12 months and obviously going in the right direction.
WTI crude futures are trading above $60.5 a barrel today, as OPEC+ meets to decide on production policy. Saudi Arabia's energy minister called for restrain saying “oil market recovery is far from complete”. The Oil market is pricing in tighter supply as the majors decline from producing more in light of the continuing disruptions across Europe due to covid-19 lockdowns but the OPEC+ members have agreed to gradually increase output over the next 3 months. If data shows that OPEC+ overproduces more than the agreed 350kbpd we could see oil drop below $60 especially if the US dollar remains bid. Oil has now traded in the range between $57 and $62 for 12 trading days, so the build-up of energy could lead to a good impulsive move on a breakout. If the Ichimoku cloud acts as support, we could be looking for that breakout to the upside.
In other money system news, the new US administration is working closely with the IMF and has allocated $650bln Special Drawing Rights (SDR), something the previous Trump administration didn’t want to encourage. The US dollar has been rising in tandem with the US Treasury Yields and with a steepening curve adding to the greenbacks bullish run.
At the London close, the DXY was trading around the $93 level has found almost $93.50 at the end of March, but is still above the daily 200 ema. US 10 and 30-year yields were also down today by over 2% each and TLT the iShares 20+ Year Treasury ETF looks to have finished its correction following on from the end of March pop off the lows.
Today’s weakening US dollar has been good for the EURUSD with the first day of April trading up to 1.17800. EURUSD would need to trade back up to the 1.2000 price levels and create a new higher high before we could say this corrective pattern was ending, and going by retail sentiment, no one is super bullish or bearish.
Cable has also attempted to breach the recent intraday swing highs and if it can capture 1.3900 again, we could be trading back into the 1.4000’s next week. If it were to gain traction the down-sloping channel break to the upside shows where first resistance from a measured move would come in which correlates to possibly the 1.4220 highs if the move was to be swift over the next couple of trading days.