DOW 16493.37 -69.93 (-0.42%), NASDAQ 4352.64 -17.13 (-0.39%),
S&P500 1925.15 -5.52 (-0.29%)
The first trading day of August has seen the DOW down 11 of the last 16.
Despite the heavy slew of numbers, I’m expecting most of it to be just noise and the market should continue downward. Yes, the employment data should be a non-event, barring any shocking upside surprises (i.e. if the unemployment rate rockets up to 7%).
Direction for Friday 1 Aug: DOWN▼
Seasonally the week tends to lean toward the bearish side, but the probability isn’t there.
With that much data out over the course of the week, it’s a difficult call. Regardless…
Direction for the Week of 28 Jul to 1 Aug: DOWN▼
That was a breather… Prior to the employment report we were almost going to open the day another 100 points lower. But a miss sent us back up to the neutral.
But the market performance is showing much more convergence to the bearish end of things, and that’s good. Thursday’s drop was a little divergent. Looks like everything is coming together now.
On the week… needless to be said. We’ve had our worst weekly drop in more than 2 years. Which says a lot.
Market Summary
Economic Data & News
Technical Analysis
Market Internals
Bonds, Currencies & Commodities
Market Summary
Industry Watch
Strong: Consumer Staples, Health Care, Materials, Utilities
Weak: Energy, Financials, Technology, Telecom Services
Other Market Moving Factors
July Nonfarm Payrolls report misses expectations (209K versus Briefing.com consensus 220K): lack of earnings growth supports current policy course at the Fed
Eurozone Manufacturing PMI misses expectations (51.8 versus expected 51.9) with most regional surveys also coming in below expectations
[BRIEFING.COM] The stock market finished a down week on a cautious note with small caps leading the retreat. The Russell 2000 lost 0.5%, widening its weekly decline to 2.6%, while the S&P 500 shed 0.3%. The benchmark index ended the week lower by 2.7%.
This morning, the market was provided a basis to rebound with the July employment report, which was just right for the policy doves (209K versus Briefing.com consensus 220K). It showed payroll growth that was weaker than expected, average hourly earnings that were flat, and an uptick in the U6 unemployment rate (accounts for underemployed and unemployed workers) to 12.2% from 12.1%.
All of those factors speak in favor of the Federal Reserve not being in a rush to raise the fed funds rate, but the market did not rally on those cues. Instead, the S&P 500 made a brief morning appearance in the green before sliding into negative territory, where it spent the afternoon. The benchmark average was able to climb off its low into the close, but could not return into positive territory.
Three sectors registered gains, while the remaining seven finished lower. In general, countercyclical groups had a decent showing with consumer staples (+0.8%) and utilities (+0.4%) posting gains, while the telecom services sector (-0.9%) ended among the laggards. The largest countercyclical group—health care—settled flat.
Notably, the staples sector finished in the lead thanks to a boost from Procter & Gamble (PG 79.65, +2.33). The Dow component rallied 3.0% after reporting a bottom-line beat on revenue that was a bit below estimates.
Elsewhere, the health care sector received support from large components like Aetna (AET 78.73, +1.20), McKesson (MCK 195.43, +3.57), and WellPoint (WLP 111.00, +1.19). The three gained between 1.1% and 1.9%, while biotechnology lagged. The iShares Nasdaq Biotechnology ETF (IBB 250.28, -0.55) shed 0.2%.
For its part, the utilities sector staged a rebound after losing 6.9% last month.
On the cyclical side, the materials sector (+0.1%) was the lone advancer thanks to relative strength among miners. The Market Vectors Gold Miners ETF (GDX 26.20, +0.29) added 1.1%, while gold futures climbed 0.9% to $1294.60/ozt.
Meanwhile, the daylong weakness among influential sectors like energy (-0.7%), financials (-0.9%), and technology (-0.4%) prevented the market from turning positive. In the financial sector, JPMorgan Chase (JPM 56.48, -1.19) was the worst performer among the majors, falling 2.1%.
Lastly, the tech sector was pressured by top-weighted components like Google (GOOGL 573.60, -5.95), IBM (IBM 189.15, -2.52), and Microsoft (MSFT 42.86, -0.30). Chipmakers, however, held up relatively well. The PHLX Semiconductor Index added 0.4%.
Treasuries rallied through the first half of the session before holding near their highs during the afternoon. The 10-yr note advanced 17 ticks, sending its yield lower by six basis points to 2.50%.
Participation was above average for the second day in a row with nearly 780 million shares changing hands at the NYSE.
Economic data was plentiful with Nonfarm Payrolls, Personal Income/Spending data, Core PCE Prices, the final reading of the Michigan Sentiment survey, ISM Index, and the Construction Spending report:
Nonfarm payrolls added 209,000 jobs in July after adding an upwardly revised 298,000 (from 288,000) in June, while the Briefing.com consensus expected 220,000 new jobs in July
Private payrolls fared worse, adding only 198,000 jobs in July following a 270,000 increase in June
The consensus expected 225,000 new private jobs in July
Even more disappointing, hourly wages were flat after increasing 0.2% in June and the average workweek remained at 34.5 hours
The unemployment rate ticked up to 6.2% from 6.1%
Personal income increased 0.4% in June after rising by the same amount in May, which matched the Briefing.com consensus
Personal spending also matched estimates with a 0.4% increase in June, up from an upwardly revised 0.3% (from 0.2%) gain in May
The University of Michigan Consumer Sentiment Index increased to 81.8 in the final July reading from 81.3 in the preliminary reading, while the Briefing.com consensus expected an increase to 82.0
The Current Conditions Index was revised up to 97.4 from 97.1
The Expectations Index rose to 71.8 in the final reading from 71.1
The ISM Manufacturing Index increased to 57.1 in July from 55.3 in June, representing the strongest reading since April 2011
The Briefing.com consensus expected the index to increase to 55.9
Construction spending fell 1.8% in June after increasing an upwardly revised 0.8% (from 0.1%) in May, while the Briefing.com consensus expected an increase of 0.3%
Private construction fell 1.0% after increasing 0.4% in May
Residential construction declined 0.3% in June
Global Markets
Asia
It was a sea of red across Asia as all of the major bourses ended in the red following yesterday’s carnage on Wall Street
Mixed Manufacturing PMI (51.7 actual v. 51.4 expected, 51.0 previous) and HSBC Final Manufacturing PMI (51.7 actual v. 52.0 expected, 52.0 previous) were not enough to keep China’s Shanghai Composite (-0.7%) above the breakeven line
Hong Kong was also pressured as the Hang Seng (-0.9%) slid off three and a half-year highs
Japan’s Nikkei (-0.6%) fell from six month-highs despite Bank of Japan Governor Haruhiko Kuroda defending the central bank’s upbeat economic outlook amid a slowdown in the data
Australia’s ASX (-1.4%) tumbled off its best level in more than six years
Europe
UK’s FTSE: -0.8%
Germany’s DAX: -2.1%
France’s CAC: -1.0%
Spain’s IBEX: -1.8%
Portugal’s PSI: -3.0%
Italy’s MIB Index: -1.0%
Irish Ovrl Index: -0.5%
Greece ASE General Index: -0.5%
Economic Data
from Briefing.com
Economic Data is listed as Actual vs Consensus. Prior Data is given in brackets. If Prior Data has been revised, revised data will be given instead, together with an indication whether it was revised upward or downward.
Nonfarm Payrolls – 08:30 : 209K vs 220K (Prior 298K▲)
Nonfarm Private Payrolls – 08:30 : 198K vs 225K (Prior 270K▲)
Unemployment Rate – 08:30 : 6.2% vs 6.1% (Prior 6.1%)
Hourly Earnings – 08:30 : 0.0% vs 0.2% (Prior 0.2%)
Average Workweek – 08:30 : 34.5 vs 34.5 (Prior 34.5)
Personal Income – 08:30 : 0.4% vs 0.4% (Prior 0.4%)
Personal Spending – 08:30 : 0.4% vs 0.4% (Prior 0.3%▲)
PCE Prices – Core – 08:30 : 0.1% vs 0.2% (Prior 0.2%)
Michigan Sentiment – Final – 09:55 : 81.8 vs 82.0 (Prior 81.3)
ISM Index – 10:00 : 57.1 vs 55.9 (Prior 55.3)
Construction Spending – 10:00 : -1.8% vs 0.3% (Prior 0.8%▲)
Auto Sales – 14:00 : Prior 5.9M
Truck Sales – 14:00 : Prior 7.5M
EMPLOYMENT DATA
Highlights
Nonfarm payrolls added 209,000 jobs in July after adding an upwardly revised 298,000 (from 288,000) in June. The Briefing.com consensus expected 220,000 new jobs in July.
Private payrolls fared worse, adding only 198,000 jobs in July following a 270,000 increase in June. The consensus expected 225,000 new private jobs in July.
The unemployment rate ticked up to 6.2% in July from 6.1% in June. The consensus expected the unemployment rate to remain at 6.1%.
Key Factors
Over the past four weeks, the initial claims level dropped to approximately 300,000. That level suggests payroll growth should be in the neighborhood of 300,000 new jobs per month. Obviously, that is not the case.
The key takeaway is that the labor market is nowhere near as strong as the claims data suggest, and the economy is still muddling through a relatively stagnant employment cycle.
It is possible that the claims data have been biased from the motor vehicle industry. Normal plant shutdowns for retooling were possibly delayed or prevented so the manufacturers can keep production up to meet elevated demand.
If this scenario is true, then an unbiased claims level would be closer to 310,000 – 320,000, which would imply payroll growth around 225,000 per month.
Actual payrolls came in below this forecast but it was within normal volatility and tolerances.
Even more disappointing, hourly wages were flat after increasing 0.2% in June and the average workweek remained at 34.5 hours.
Altogether, aggregate earnings increased a very modest 0.2% in July after rising by 0.5% in June. The lack of strong wage growth will put downward pressure on consumption gains.
Sector-wise, the employment gains were relatively healthy. Goods producing jobs increased by 58,000, up from a 38,000 increase in June. Manufacturing added 28,000 new jobs following a 23,000 increase in June. The services sector added 140,000 new jobs, down from a 232,000 increase in June. Temporary help employment growth slowed, which signals a slight improvement in long-term job stability.
The labor force increased by 329,000, which suggests that some discouraged workers are again looking for employment.
The number of employed workers increased by 131,000. As opposed to June, most of the newly hired accepted full-time employment rather than part-time.
Big Picture
The shockingly low initial claims data over the past four weeks seem to be a result of biases and not an improvement in labor market conditions.
PERSONAL INCOME AND SPENDING
Highlights
Personal income increased 0.4% in June after rising by the same amount in May. The Briefing.com consensus expected personal income to increase 0.4%.
Personal spending also increased by 0.4% in June, up from an upwardly revised 0.3% (from 0.2%) gain in May. The consensus expected spending levels to increase 0.4%.
Key Factors
The personal income and spending data for June was already incorporated in the second quarter GDP report that was released earlier in the week. The only bit of new information was about how the revisions to the data affected the monthly gains.
Overall wages and salaries increased 0.4% in both May and June. That gain was in-line with the 0.5% increase implied in the June employment report.
Medicaid gains, which were responsible for a large portion of income growth in Q1 2014, have slowed significantly over the last few months.
Goods spending increased 0.8% in June after increasing by 0.5% in May. Services spending increased 0.2% for a second consecutive month.
The savings rate remained at 5.3% for a second consecutive month in July.
Big Picture
Without an acceleration in income growth, sustainable consumption growth will be difficult.
UNIVERSITY OF MICHIGAN CONSUMER SENTIMENT
Highlights
The University of Michigan Consumer Sentiment Index increased to 81.8 in the final July reading from 81.3 in the preliminary reading. The index stood at 82.5 in June. The Briefing.com consensus expected the Consumer Sentiment Index to increase to 82.0.
Key Factors
Earlier in the week, the Conference Board’s Consumer Confidence Index increased to its highest point since October 2007. The conflicting readings between the sentiment and confidence indices are not new, and they show why one shouldn’t take changes in confidence or sentiment too seriously.
The Current Conditions Index was revised up to 97.4 from 97.1 in the preliminary reading. The index was at 96.6 in June.
The Expectations Index rose to 71.8 in the final reading from 71.1 in the preliminary reading. The Expectations Index is down from 73.5 in June.
The drop in confidence in July does not necessarily mean that consumption growth will also decline. Spending gains rely on income growth. As long as income remains on an upward trend, spending should follow.
Big Picture
Consumer sentiment has little influence on consumption. As long as payroll levels continue to expand, the resulting income growth should keep consumption gains steady regardless of the monthly ebbs and flows in sentiment.
ISM MANUFACTURING INDEX
Highlights
The ISM Manufacturing Index increased to 57.1 in July from 55.3 in June. That was the strongest reading since April 2011. The Briefing.com consensus expected the index to increase to 55.9.
Key Factors
All of the regional Federal Reserve manufacturing surveys showed solid manufacturing growth in July. The national ISM Index confirmed those reports.
Production levels improved as the related index increased to 61.2 in July from 60.0 in June. New orders strengthened to 63.4 from 58.9. Backorders remained in a contraction for a second consecutive month, but the pullback eased as the index increased to 49.5 from 48.0.
The Employment Index increased to 58.2 in July from 52.8 in June.
Big Picture
This is a highly overrated index. It is merely a survey of purchasing managers. It is a diffusion index, which means that it reflects the number of people saying conditions are better compared to the number saying conditions are worse. It does not weight for size of the firm, or for the degree of better/worse. It can therefore underestimate conditions if there is a great deal of strength in a few firms. The data have thus not been either a good forecasting tool or a good read on current conditions during this business cycle. It must be recognized that the index is not hard data of any kind, but simply a survey that provides broad indications of trends.
CONSTRUCTION SPENDING
Highlights
Construction spending fell 1.8% in June after increasing an upwardly revised 0.8% (from 0.1%) in May. The Briefing.com consensus expected construction spending to increase 0.3%.
Key Factors
Private construction fell 1.0% after increasing 0.4% in May.Residential construction declined 0.3% in June.
Spending on new structures dropped 0.7%. That was in-line with the recent softness in new home starts from the single-family sector. Home improvement spending increased 0.4%.
Nonresidential construction spending fell 1.6%. Most of the sectors reported losses in June. The heaviest hit included communication (-5.4%), lodging (-3.8%), power (-3.6%), and commercial (-1.3%). Office construction increased a modest 0.4%.
Public construction spending fell 4.0% in June. Much of the decline was the result of a 10.4% decline in highway and street spending and a 4.9% decline in educational spending.
Big Picture
There is still no sign of rapid construction growth after the extreme winter. The idea of pent-up demand from delayed production remains a theory.
In Other News…
HEADLINE NEWS
Alexion Pharma (ALXN): European Commission grants Orphan Drug designation to Soliris (eculizumab) for the treatment of patients with myasthenia gravis
Bally Technologies (BYI) to be acquired by Scientific Games (SGMS) for $83.30/share in cash; transaction expected to be immediately accretive to Scientific Games’ EPS and cash flow
Burger King (BKW) plans to eliminate ties with China amid food scare
Citigroup (C) to sell 80% of its $1.5 bln limited partnership interest in Metalmark Capital Partners II to Lexington
ISIS Pharm (ISIS) initiates Phase 3 study of ISIS-SMN Rx in infants with spinal muscular atrophy; dosage of first infant will trigger $18 mln milestone payment
YUM! Brands (YUM) to improve oversight in China, according to reports
China’s crackdown on corruption hurting Macau casinos, according to reports; Macau Gaming Inspection and Coordination Bureau reports July gross gaming rev -3.6% YoY
Israel and Hamas have declared a 72-hour humanitarian ceasefire
EARNINGS/GUIDANCE
Burger King (BKW) beats by $0.02, reports revs in-line; increases dividend
CBOE Holdings (CBOE) reports EPS in-line, revs in-line
Edison (EIX) beats by $0.26, misses on revs; sees full yr core EPS well above high end of guidance range
Expedia (EXPE) beats by $0.28, beats on revs
Fluor (FLR) beats by $0.03, misses on revs; co maintains FY14 EPS guidance, in-line
GoPro (GPRO) beats by $0.01, beats on revs
Health Care REIT (HCN) beats by $0.04, reports revs in-line; raises FY14 FFO in-line
Hilton Hotels (HLT) beats by $0.02, beats on revs; guides Q3 EPS in-line; raises FY14 EPS above consensus
LinkedIn (LNKD) beats by $0.12, beats on revs; guides Q3 EPS above consensus, revs above consensus; guides FY14 EPS above consensus, revs above consensus
Procter & Gamble (PG) beats by $0.04, misses on revs; guides FY14 EPS in-line
Societe Generale (SCGLY) beats Q2 expectations; shares slide on Rosbank concerns
Tesla Motors (TSLA) beats Q2 estimates; delivery, gross margin targets on track
Western Union (WU) reports EPS in-line, revs in-line; guides FY14 EPS in-line
Weyerhaeuser (WY) beats by $0.05, misses on revs
ANALYST ACTIONS
Upgrades
Beazer Homes (BZH) upgraded to Buy from Neutral at Sterne Agee
Expedia (EXPE) upgraded to Outperform from Mkt Perform at Raymond James
Invesco (IVZ) upgraded to Buy from Hold at Deutsche Bank; tgt raised to $43 from $39
Marathon Petroleum (MPC) upgraded to Outperform from Neutral at Credit Suisse
Nabors Industries (NBR) upgraded to Sector Outperform at Howard Weil
PG&E (PCG) upgraded to Outperform from Neutral at Credit Suisse
Red Hat (RHT) upgraded to Positive from Neutral at Susquehanna; tgt raised to $70 from $57
Downgrades
3D Systems (DDD) downgraded to Neutral from Buy at Citigroup; downgraded to Sector Perform at RBC Capital Mkts, tgt lowered to $54
Bed Bath & Beyond (BBBY) downgraded to Perform from Outperform at Oppenheimer
Discovery (DISCA) downgraded to Neutral from Buy at Guggenheim
Other
Expedia (EXPE) tgt raised to $92 from $82 at Cantor Fitzgerald; Buy
Technical Analysis
DOW JONES INDUSTRIAL AVERAGE
16493.37 -69.93 (-0.42%)
Volume: 84,856,015 (above average of 77,103,194)
Range: 16437.07 – 16584.75
NASDAQ COMPOSITE
4352.64 -17.13 (-0.39%)
Volume: 504.6M (above average of 458.8M)
Range: 4324.02 – 4385.05
S&P500 INDEX
1925.15 -5.52 (-0.29%)
Volume: 519.2M (above average of 450.9M)
Range: 1916.37 – 1937.35
Possible stall on the NASDAQ and S&P500. The DOW doesn’t look so good.
The NASDAQ also sits on its 50MA. Any continued move below this level should send the index lower.
Market Internals
NYSE:
Lower Volumes than the day before - 706.7M vs 926.7M
Decliners outpaced Advancers (adv/dec): 1133 / 1945
New Lows outpaced New Highs (highs/lows): 15 / 101
NASDAQ:
Lower Volumes than the day before - 2008.4M vs 2253.0M
Decliners outpaced Advancers (adv/dec): 969 / 1740
New Lows outpaced New Highs (highs/lows): 22 / 139
VOLATILITY S&P500 (VIX)
17.03 +0.08 (+0.47%)
Decliners outpaced Advancers by 1.75 on lower volumes than the day before (-464.6M -14.61%).
Not as convincing as the day before, but that’s asking for too much.
The VIX continued to push higher, albeit by a little. But it definitely doesn’t show signs of retracing.
Treasury Bonds, Currencies & Commodities
from Briefing.com
Treasury Bonds
The Week in Review: Curve Steepens as Fed Tapers and GDP Prints 4.0%
Treasuries saw a mixed week as buying took place up front while sellers had control of longer dated maturities.
The Federal Open Market Committee announced a $10 bln trim to its asset purchase program, lowering the figure to $25 bln per month.
Notable were comments indicating “a range of labor market indicators suggests that there remains significant underutilization of labor resources” and that “the likelihood of inflation running persistently below 2 percent has diminished somewhat.”
Traders also had to grapple with macro headwinds as Argentina defaulted on its debt, the ability of Portugal’s Banco Espirito Santo to meet its debt obligations remained in doubt, and the conflict in Gaza intensified.
On Wednesday, the Q2 GDP-Adv. look showed the U.S economy grew at a 4.0% QoQ annualized clip (3.2% QoQ annualized expected), the strongest since Q3 2013.
Friday’s July nonfarm payroll report missed estimates with a 209K print (220K expected). The unemployment rate ticked up to 6.2% (6.1% expected, 6.1% previous) as the labor force participation rate improved to 62.9% (62.8% previous).
Housing data continued to disappoint as pending home sales (-1.1% actual v. -0.8% expected) and Case-Shiller 20-city Index (9.3% actual v. 10.0% expected) were the latest figures to miss the mark.
The rest of the week’s data was mostly disappointing Chicago PMI (52.6 actual v. 60.0 expected), hourly earnings (0.0% actual v. 0.2% expected), Michigan Sentiment – Final (81.8 actual v. 82.0 expected), and construction spending (-1.8% actual v. 0.3% expected) all fell short of estimates.
Only consumer confidence (90.9 actual v. 85.6 expected) and ISM Index (57.1 actual v. 55.9 expected) beat.
This week’s auctions were mixed.
Monday’s $29 bln 2y note auction drew 0.544%, the highest since May 2011, and saw a slightly less than average 3.22x bid/cover. Support was provided by the 26.9% indirect takedown, and primary dealers were left with a whopping 58.8% of the supply.
Tuesday’s solid $35 bln 5y note auction drew 1.720% and a 2.81x bid/cover. Strong bids from both indirects (48.2%) and directs (25.9%) left primary dealers with just 25.9% of the supply.
Wednesday’s average $29 bln 7y note auction drew 2.250% (WI 2.245%) and a 2.58x bid/cover. A light direct bid (15.2%) was supported by a larger than usual indirect takedown (47.3%). Primary dealers ended up with 37.5% of the supply.
Up front, selling early in the week ran the 2y up to almost 0.600%. The weakness ran the yield to highest levels since May 2011 before sliding to 0.464% by Friday’s close.
In the belly, the 5y slipped -2bps to 1.673%. The yield flirted with its highest close of 2014 as trade probed the 1.800% level, but a -9bp drop on Friday dropped action off the level.
The 10y tacked on +2bps to 2.505%. Mid-week selling caused the benchmark yield to test resistance and the 100 dma near 2.600% before threatening a sub-2.500% close at week’s end.
At the long end the 30y lagged, +4bps @ 3.297%. Buying early in the week dropped action to a 13-month low before seeing several tests of the 50 dma (3.370%). However, trade was unable to punch through the level as resistance in the area held strong.
This week’s action swung the curve steeper as the 2-10-yr spread widened to 204bps and the 5-30-yr spread expanded to 162.5bps.
2Yr 0.47 (-0.06), 5Yr 1.67 (-0.09), 10Yr 2.52 (-0.06), 30Yr 3.29 (-0.03)
2/10 Spread: 205bps (unch); 2/30 Spread: 282bps (+3)
Currencies
Dollar Pulls Back:
The Dollar Index holds small losses as trade fights to hold the 81.30 area.
Early action saw the Index probe 81.50 for the third straight session, but trade was once again unable to take the level as sellers emerged at 10-month highs.
EURUSD is +40 pips @ 1.3425 as trade looks to put in its first real gain in more than two weeks. Recent days have been unkind to the single currency as traders have had to grapple with concerns Portugal’s Banco Espirito Santo will be unable to meet its debt obligations. Retaking the 1.3500 level is a high priority for the bulls. Eurozone data is limited to Spanish unemployment change.
GBPUSD is -50 pips @ 1.6835 as sellers have their way for the 12th time in 13 days. Sterling has come under pressure as of late as a slowdown in the data has pushed back against talk the Bank of England will become the first major Western central bank to hike rates and emerge from the crisis. A close below 1.6858 would be notable as it would be the first below the 100 dma in a year. Britain’s Construction PMI will be released Monday.
USDCHF is -30 pips @ .9055 as action slides off its best levels of 2014. Today’s weakness is more the result of euro strength than anything else, and has action nearing .90000 support. The 50 and 200 dma provide further help just below. Switzerland’s SVME PMI is scheduled for Monday.
USDJPY is -25 pips @ 102.55 as sellers take control for the first time in 11 days. The pair probed the 103.00 level in early action after Bank of Japan Governor Haruhiko Kuroda defended the central bank’s upbeat outlook despite the recent spell of weak data; however, trade has seen a reversal amid U.S. hours. Support near 102.10 is guarded by the 50, 100, and 200 dma.
AUDUSD is +20 pips @ .9315 as buying develops for the first time in four days. The hard currency has managed to shake off the tepid PPI print, and is climbing off its lowest levels in nearly two months. Australian retail sales and ANZ Job Advertisements will be released Sunday evening. Most Australian banks are closed for holiday. China’s Non-Manufacturing PMI is due out Saturday.
USDCAD is +5 pips @ 1.0910 as trade climbs for the sixth time in seven days. The light bid has the pair nearing its best level in two months as the bulls fight to hold the 100 dma. Canadian banks are closed Monday in observance of Civic Day.
Commodities
Closing Commodities: Crude Oil Falls Over 4% On The Week
Dec gold lifted from its session low of $1281.00 per ounce as the dollar index weakened following this morning’s jobs report.
The July employment reading showed that nonfarm payrolls added 209K jobs in July after adding an upwardly revised 298K (from 288K) in June, while the Brieifng.com consensus expected 220K new jobs.
The yellow metal rose as high as $1298.40 per ounce and eventually settled with a 0.9% gain at $1294.60 per ounce. Despite today’s strength, gold booked a 0.8% loss for the week.
Sep silver rose to a session high of $20.58 per ounce after coming off its session low of $20.30 per ounce set in early morning pit trade. However, it slipped into negative territory in afternoon action and settled 0.1% lower at $20.38 per ounce, bringing losses for the week to 1.3%.
Sep crude oil traded in the red all day, extending losses for a fifth consecutive session. The energy component fell as low as $97.07 per barrel in morning action and chopped around slightly above that level for the remainder of the session. It eventually settled 0.3% lower at $97.85 per barrel, bringing losses for the week to 4.2%.
Sep natural gas touched a session high of $3.88 per MMBtu in morning floor trade but quickly retreated back into negative territory. It continued to trend lower and settled with a 1.0% loss at $3.80 per MMBtu, cutting gains for the week to 0.5%.
NYMEX Energy Closing Prices
Sep crude oil fell $0.27 to $97.85/barrel
Crude oil traded in the red all day, extending losses for a fifth consecutive session. The energy component fell as low as $97.07 in morning action and chopped around slightly above that level for the remainder of the session. It eventually settled 0.3% lower, bringing losses for the week to 4.2%.
Sep natural gas fell 4 cents to $3.80/MMBtu
Natural gas touched a session high of $3.88 in morning floor trade but quickly retreated back into negative territory. It continued to trend lower and settled with a 1.0% loss, cutting gains for the week to 0.5%.
Sep heating oil fell 2 cents to $2.87/gallon
Sep RBOB fell 6 cents to $2.74/gallon
CBOT Agriculture and Ethanol/ICE Sugar Closing Prices
Sep corn fell 5 cents to $3.52/bushel
Sep wheat rose 12 cents to $5.43/bushel
Nov soybeans fell 21 cents to $10.60/bushel
Sep ethanol rose 1 cent to $2.00/gallon
Sep sugar (#16 (U.S.)) rose 0.08 of a penny to 24.87 cents/lbs
COMEX Metals Closing Prices
Dec gold rose $11.50 to $1294.60/oz
Gold lifted from its session low of $1281.00 as the dollar index weakened following this morning’s jobs report. The July employment reading showed that nonfarm payrolls added 209K jobs in July after adding an upwardly revised 298K (from 288K) in June, while the Brieifng.com consensus expected 220K new jobs. The yellow metal rose as high as $1298.40 and eventually settled with a 0.9% gain. Despite today’s strength, gold booked a 0.8% loss for the week.
Sep silver fell $0.03 to $20.38/oz
Silver rose to a session high of $20.58 after coming off its session low of $20.30 set in early morning pit trade. However, it slipped into negative territory in afternoon action and settled 0.1% lower, bringing losses for the week to 1.3%.
Sep copper fell 2 cents to $3.21/lbs
Conclusion
Friday’s performance looks like just a pause after Thursday’s proceedings. Ahead of the weekend, market participants were likely not interested in opening new positions, and preferred to close them – which may be why we got the mid-day rally.
Monday will be deciding factor as to whether this downside will continue… or not.
It’s a busy weekend for me (hence the late update), but I’m looking forward to Monday.
Daily Directional Accuracy (from 14 May 2014): 39/55 (70.91%)
Weekly Directional Accuracy (from 16 May 2014): 7/11 (63.63%)