US Economic Report Slate Extremely Active

STOCK INDEX FUTURES

Global equity markets overnight were mostly higher with exceptions seen in Australia, Russia, and Hong Kong with those markets trading mere fractions lower. Overnight economic news of importance included much stronger than expected German business morale, current assessment, and expectations readings for June from the Ifo. Earnings announcements will include Accenture and Darden Restaurants before the Wall Street opening while Nike and FedEx report after the close.

S&P 500: While the S&P has not forged an all-time high in the early going today, the index appears to be poised to breakout up again. However, it will be interesting to see the equity market’s reaction to this morning’s very active schedule of US data, as data over the last month, has clearly indicated the recovery is limping along and is uneven. Initial pivot point support in the September S&P today is 4230.50 with the next logical upside target seen at 4275.00.

CURRENCY FUTURES

DOLLAR: While US data this week has minimally favored growth and the dollar seems to be under pressure as-a-result of the optimism flowing from decent data and strength in US equities, we are not convinced that the dollar is in a mode of trading off the ebb and flow of risk on and risk off. On the other hand, the dollar could see sudden gyrations today off a morning Fed speech from Williams who recently came down on the side of dovish policies because of disappointment over jobs.

YEN: The Yen appears to have built thin support at 90.00 and it is possible that the Yen is deriving temporary support from a significantly hotter than expected Japanese corporate service price index reading for May. In the near term, the Yen remains in a downtrend, but direction could be listless today.

CANADIAN DOLLAR: The Canadian charts are very similar to the Pound and euro charts, but the oversold condition has been balanced with the recent break, but without a noted slide in the US dollar further Canadian gains could be difficult. On the other hand, the Canadian has already regained the first retracement level of the June washout with the 50% corrective target pricing seen up at 81.67.

INTEREST RATES

The charts in the bond market remain negative but given very narrow ranges over the prior 2 trading sessions, negative signals from the charts are minimally important. However, it appears as if the net take-away from a series of federal reserve headlines recently has stealthily brought about a slight pulling forward of US interest rate hike timing. On the other hand, the timing for a US rate hike remains far enough in the future to be of little sustained impact in the near term. In fact, recent US scheduled data has continued to be disjointed which in turn suggest the US economy has become choppy instead of forging a steady pattern of recovery. However, today’s US economic report slate is extremely active with the primary focus centered on initial and ongoing claims figures. While the trade expects a decline in claims readings it should be noted that this report has disappointed analysts more times than not over the past 5 weeks! Yet another modest negative hanging over treasury prices this morning is another new high in the NASDAQ, with the S&P also close to carving out a new record high! The North American session will start out with a weekly reading on initial jobless claims that is expected to have a moderate downtick from the previous 412,000 reading. Ongoing jobless claims are forecast to have a modest weekly decline from the previous 3.518 million reading. First quarter gross domestic product is expected to hold steady with the previous 6.4% annualized rate. May durable goods are forecast to have a sizable uptick from April’s -1.3% reading. The May goods trade balance is expected to have a modest downtick from April’s $85.2 billion monthly deficit. May wholesale inventories are forecast to have a modest downtick from April’s 0.8% reading. The Kansas City Fed’s June manufacturing index is expected to have a moderate uptick from May’s 26 reading. New York Fed President Williams will speak during morning US trading hours while Dallas Fed President Kaplan and St. Louis Fed President Bullard will speak during the afternoon. Earnings announcements will include Accenture and Darden Restaurants before the Wall Street opening while Nike and FedEx report after the close.