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Trade Desk Thoughts: Huge Fundamentals

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Trade Desk Thoughts:

Huge Fundamentals

Forex Trader Note:
Asian equity trade overnight has supported the strong buying seen this week in S&P futures trade, and with the Nikkei holding above 9550, it lends support to the the German Dax (5765) as that market looks to hold 5700 support.

If European equities can hold the break-even line, it will allow U.S. stocks a good chance of absorbing whatever the private sector employment read from ADP offers up at 8.15am EST. The expected read is for a drop in job losses, from -203K last month, to -149K this month. If things print as expected, the long side of equity trade will be well backed, especially if the global markets have held support.

S&P trade draws in 1115, 1122, and 1134, with 1105 the swing point in trade on Wednesday. A negative outlook for stocks brings 1095 and 1085 into focus.

The major currency pairs are trying to break down the short side of the dollar, and with a positive equity (read risk-tolerant) market it would seem that initiating the next leg lower on the greenback is only a matter of time. However, the buck is not going down without a fight, and ahead of the ECB and Bank of England rate decisions on Thursday, there is plenty of volatility in the dollar index arena.

Oil (78.20) and gold (1120) are backing a short-Usd play, but choosing the one pair to get long against the Usd may be a little challenging. Euro and Pound are dangerous to trade ahead of pivotal rate decisions, the Swiss franc is a mirror Euro image, Australian and Canadian dollars are at overbought reads against the Usd, and the Japanese yen is absorbing the Bank of Japan quantitative easing program.

The ADP numbers may be more important today, in the technical and fundamental situation created by the global trading arena already in one day of trade this week, than at any other time in is relatively short history. Add to that, the oil inventory numbers at 10.30am EST from the U.S., and then the Beige Book (Fed Meeting Minutes) at 2.00 pm EST, and traders have a power-packed Wednesday to look forward to

Momentum right now is building on the long side of global trade, and it seems as though that the ADP jobs report will be pivotal in regard to continuing that sentiment. The private sector ADP report is gaining respect, and although completely different in its make-up to Friday's Non-farm Circus, is becoming a monthly release that is garnering not only interest, but respect.

Disclosure: No positions
 



Disclosure: No positions