Markets are looking forward to tomorrows non-farm payroll figures which are sure to set the tone for the upcoming FOMC meeting and the possibility of a December rate hike. So far it has been a case of the labour market surprising many in the markets, but the reality is that many analysts are expecting it to tailor off by the end of this year. However, recently there have been many surprises and the markets will be key to see if the expectations of a 180K rise can be beaten by something more substantial. The feeling is that it’s certainly possible and the flow on effects could be quite strong for a number of markets.
For me the big market mover is likely to be the S&P 500, once again it has clawed back ground after facing stiff volatility early on in the weekly trading session. After hitting the 100 day moving average the bulls have come back into the market and defended heavily against any further bearish movements in the market. The market is now poised to push further highs on the chart and one of the key targets is resistance at 2484, which the market is not far off at all. If we do see a strong reading I would expect to see the S&P 500 look to push through this level initially and the market to react accordingly, there may be some big swings, but most would expect it to hold above and maybe even look to move to the 2500 level and hold there. In the event we see weakness then I would anticipate the S&P 500 slipping down the charts to the 100 day moving average and finding strong support at this key level. To break this level would be a surprise but also put support at 2406 and 2353 as the main targets for bears.
One of the mother major movers has been the USDCAD, which saw a strong push back today as the CAD surged against the USD erasing all the gains from yesterday. The CAD has been heavily influenced by oil markets and today was no different as the Oil markets jumped on a squeeze on gasoline supply. Expectations are now building that it may continue its run against the USD which has come under immense weakness in the markets as of late. Non-farm payroll as mentioned above is certainly one thing to watch out for, but a positive result I could see pushing up to resistance at 1.2757 before taking a breather, or in fact hitting the 20 day moving average and slowing down. In the event the USDCAD did continue its bearish run then 1.2429 is the support level to aim for, with expectations we could go lower and hit the 1.2400 mark on the charts.