Dow futures +0.02% at 34580
S&P futures +0.12% at 4348
Nasdaq futures +0.6% at 14872
FTSE -0.18% at 7150
Dax +1.0% at 15656
Euro Stoxx +0.4% at 4068
Stocks edge higher, Nasdaq leads the way
US futures are heading higher, rebounding after losses in the previous session and as investors look ahead to the release of the FOMC minutes and more jobs data.
The Dow and the S&P 500 finished lower in the previous session, the latter snapping a 7 day winning run. However, Nasdaq closed at a fresh all time high. The tech heavy index is once again leading the charge higher today as treasury yields decline further. The rotation into this growth stocks is very much back in play.
Recent data has been on the disappointing side suggesting that the tailwind from the reopening could be starting to fade. Yesterday the ISM services PMI declined by more than expected to 61.4.
Attention will now turn to the minutes from the latest FOMC meeting. The minutes relate to the June Fed meeting when the Fed unexpectedly made a hawkish shift to expecting 2 interest rate rises in 2023, rather than nothing until 2024. Investors will be scrutinizing the minutes closely for further clues as to the Fed’s next moves.
However it is worth keeping in mind that the minutes are already almost 3 weeks old, potentially making them outdated. Given the tick higher in unemployment in June and the weaker than forecast ISM services PMI, concerns over the Fed accelerating towards tighter policy are already easing.
JOLTS job openings will also be in focus and are expected to show that job vacancies reached a fresh record high of 9.388 million. With an expected new record number of vacancies and unemployment ticking higher, this data could raise more questions than it brings answers.
Where next for the Dow Jones?
The Dow Jones sold off in the previous session but found support at the 50 day ma. The index continues to trade above its ascending trendline dating back to early November, just. The RSI is in bullish territory, and pointing higher, supportive of further gains. Any meaningful move higher will need to break above 34850 a level which has capped gains several times over the past 6 weeks, before making a move on 35000 and fresh all-time highs. On the downside, 34320 the confluence of the 50 sma and the ascending trendline could prove a tough nut to crack. A move below 33730 horizontal support and the 100 sma is needed to negate the near-term uptrend.
FX – Euro remains under pressure
The US Dollar is treading water, holding onto gains from the previous session ad defying falling treasury yields. The greenback looks ahead to the jobs data and FOMC minutes for further clues
EUR/USD trades under pressure after weaker than expected German industrial production numbers. German industrial production unexpectedly fell -0.3% in May, adding to -0.3% declines last month and missing forecasts of a 0.5% rise. The data adds to evidence that the semiconductor supply bottlenecks are slowing the recovery in Europe.
GBP/USD +0.27% at 1.3834
EUR/USD -0.01% at 1.1821
Oil rallies ahead of API data
Oil prices are rebounding after shedding over 3.5% in the previous session following the collapse of OPEC+ talks. The group failed to agree to unanimously agree to the pace at which to raise oil supply, with UAE dissenting against a 2 million barrel per day rise from August to December. As a result of the talks being abandoned fears rose of producers turning on the supply taps to gain market share, echoing the price war from last year.
Today those fears have calmed. Leaders from Saudi Arabia nor the UAE are not expected to allow the disagreement to escalate to such dangerous levels.
Attention will now turn to API data due late today. Surging oil demand and supply limited by OPEC means that inventories are being drained. Another larger than expected draw on crude stocks could propel oil prices higher.
US crude trades +1.5% at $74.11
Brent trades 1.5% at $75.42
15:00 JOLTS job openings
15:00 Canada Ivey PMI
19:00 FOMC minutes
21:30 API Crude oil inventories
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