Stock Market
Today is an important day for the US stock market, and market players are nervous about the most important economic data on the planet—the US NFP data. The US ADP data usually sets the tone for the US NFP data, and given that we had a big surprise for the US NFP data last month and the US ADP number has already confirmed that the jobs market is robust, traders should expect another big surprise to the upside. We believe that today’s actual number could easily be above the forecast of 224K—remember the last reading came in at 339K?
If today’s number comes in stronger than the forecast and the actual reading shows that there is an echo of yesterday’s message in today’s number, then we think that market players are likely to become a little more risk averse as the expectations will be that there will be a couple of rate hikes from the Fed.
However, we think that market players and speculators are getting ahead of themselves and aren’t paying close attention to the fundamentals. A strong labour market and weak oil prices don’t go together; there is something missing here that needs attention. In addition, we believe that inflation in the third quarter is going to move a bit closer to the Fed target, and the moment it begins to fall in the 3 handle, it is highly likely that speculators will make a u-turn and there will be more conversation about a rate cut or extended period of rate pause.
Thus, we continue to believe that the current rally in Treasury yields and the drop in the equity market is actually an opportunity to jump on the trend, which has posted strong results for the first half of this year. In addition, markets need some sort of excuse for selling off, and we believe that the current strength in the labour market is giving traders an excuse to take some profit off the table, but the overall direction of the equity market is very much intact.
Bitcoin Price
The crypto-king has become a darling among institutional traders, who are very eager to see if BlackRock is going to win at a place where everyone else failed. Of course, the success of the institute is a major game-changer for the whole crypto space. The current momentum in Bitcoin is certainly helping other meme-coins as well, which are also moving higher as Bitcoin begins to move.
In terms of technical price level, we are confident that the current move is more about the test of the next resistance level, which is at 40K, and anything before that doesn’t really have any significant value. Therefore, the price action will continue to move higher in the coming days, and there is actually also a possibility of a buy a rumour and sell the fact, which means that the Bitcoin price may continue to move in the event of the bitcoin ETF getting approved, and when it actually sees the light of day, we may see a bit of a sell-off.
Gold Price
Gold prices continue to remain volatile, and today we could see major volatility coming into the market. This is because the US NFP number is going to bring significant movement in the dollar index, and any strength or drop in the dollar index would influence the gold price.
Gold price chart
We think for now there are more odds stacked in favour of bears; having said this, it is extremely important to continue to pay attention to the support of 1,900, which the price continues to hold. But the odds are that we may see another leg to the downside, and this means that the price may visit the price level of 1850.
Oil Prices
Oil traders are mainly betting their money on one thing and one thing alone: that they believe that OPEC and its members will continue to play an active role in the market and that they will continue to reduce prices. Demand isn’t actually picking up, and the Saudis and Russians—the two big players in OPEC—are determined to do whatever it takes to reduce the supply to keep the prices at what makes sense to them.
Oil Price chart
From a trading perspective, anything that makes the crude oil prices trade below the 70-handle opens the room for another action and reaction from the Saudi Having said this, if oil prices really need to see a serious rally, we really need the demand equation to pick up, and the most important factor here is China. OPEC can keep prices artificially higher by cutting prices, but the fact that matters most is demand, and we think that this part of the equation is more likely to improve in the third quarter of this year as the PBOC is still very much committed to its dovish monetary policy stance.
