Nonfarm Payrolls Increased in May

By Alan Bush

STOCK INDEX FUTURES

Stock index futures are sharply higher after the much better than expected May U.S. employment numbers were released.

Nonfarm payrolls increased 2,509,000 when economists anticipated a decline of 7,725,000.

The unemployment rate was 13.3%, which compares to the estimated 19.8% and average hourly earning were up 3.8% when economists predicted a 0.9% gain.

June S&P 500 futures advanced to their highest level since February 27 and NASDAQ futures are closing in on their record highs.

The 2:00 central time April consumer credit report is expected to show a $14.0 billion decline.

Stock index futures have been performing well in spite of a variety of old and new geopolitical concerns.

 

CURRENCY FUTURES

It is starting to look like the U.S. dollar may be bottoming after being down for six days.

The euro currency appears to be making a near term top now that much of the bullish news is out, especially yesterday’s news that the European Central Bank at its regularly scheduled policy meeting almost doubled its asset-buying program. The ECB is adding EUR600 billion ($675 billion) to the EUR750 billion that it announced in March.

The euro is higher despite news that German manufacturing orders declined sharply on the month in April. Manufacturing orders fell 25.8% in April. Economists expected orders to fall 19.1% from the previous month.  On an annual basis, orders declined 36.6%.

The British pound is higher despite few signs of progress in the latest E.U.-U.K. trade talks.

The Canadian dollar and the Australian dollar are higher in light of higher crude oil prices.

 

INTEREST RATE MARKET FUTURES

Futures are sharply lower in response to the surprise increase in nonfarm payrolls when a large decline in payrolls was expected.

The next Federal Open Market Committee meeting is scheduled for June 9-10. According to financial futures markets there is a 91.4% probability that the FOMC will leave its fed funds rate unchanged at zero to 25 basis points. Also, there is an 8.6% probability of a 25-basis point increase at next week’s meeting.

This suggests that there is a growing belief that there will be recovery in the economy later this year.

 

SUPPORT & RESISTANCE

June 20 S&P 500

Support    3104.00     Resistance    3185.00

 

June 20 U.S. Dollar Index

Support    96.380       Resistance    97.140

 

June 20 Euro Currency

Support    1.12780     Resistance    1.13890

 

June 20 Japanese Yen

Support    .91100        Resistance    .91770

 

June 20 Canadian Dollar

Support    .74000        Resistance    .74720

 

June 20 Australian Dollar

Support    .6927           Resistance    .7021

 

June 20 Thirty Year Treasury Bonds

Support    172^8          Resistance    176^0

 

August 20 Gold

Support    1680.0         Resistance    1725.0

 

July 20 Copper

Support    2.4800         Resistance     2.5750

 

July 20 Crude Oil

Support   36.95             Resistance    39.68

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