US open: Stocks set to rise, jobless claims fall to post pandemic low

US stocks edge higher, tech again leading the move. US jobless claims fall to post pandemic high, picking the USD off monthly lows.

USA (2)

US futures

Dow futures +0.23% at 35393

S&P futures +0.25% at 4534

Nasdaq futures +0.28% at 15654

In Europe

FTSE +0.12% at 7150

Dax +0.21% at 15850

Euro Stoxx +0.16% at 4232

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Futures trade lower but set for strong monthly gains

US stocks are set for a stronger start with tech stocks leading the way. The Nasdaq outperformed its peers yesterday and it lining up for a repeat performance today amid cooling bets that the Fed will move sooner, even though jobless claims fell to a fresh post covid low.

US initial jobless claims fell last week to 340k, down from 354k and beating forecasts of 350k. This was also the lowest reading since the start of the pandemic. The fact that the US Dollar has inched higher off session lows suggests that the figures are helping calm concerns following yesterday’s ADP employment report, at least in the FX market.

The ADP report grossly missed forecasts raising doubts over the strength of the labour market recovery and whether it was strong enough for the Fed, who are watching the labour market closely for clues on when to start tapering bond purchases.

So far today's data is being reflected in the FX market with the US Dollar edging higher. However, US stocks continue to cling to record high particularly high growth tech which often outperform amid an easy monetary policy environment.

All eyes will now turn to Friday’s non-farm payroll report for clues over when the Fed could rein in its $120 billion bond purchases per month. and doesn’t bode well for Friday’s NFP which is expected to show 750,000 jobs added in August down from 943k.  Whilst a stronger than forecast print could lift the US Dollar, stock traders might now welcome a sold jobs report given that it could indicate a sooner move to tightening policy.

Where next for Nasdaq price?

The Nasdaq is set to continue higher extending its breakout from 15175. The index remains within in touching distance of 157000 a trade through here is needed for fresh all time highs. On the flip side it would take move below  15190 to negate the near term uptrend and a move below 14710 the low August 19 to change the longer term outlook to a downtrend.

FX – EUR steady even as ECB tapering chances improve

The US Dollar is trading steady around a monthly lows although off the session lows after the better than forecast jobless claims.

EURUSD trades just a few ticks higher despite stronger than expected PPI inflation data and amid growing expectations of the ECB moving to taper. PPI came in at 2.3% MoM in July, up from 1.4% in June and well ahead of the 1.1% forecast. This suggests that CPI which came in at 3% could remain elevated for longer. This boosts the chances of the ECB tapering its bond purchases.

GBP/USD  +0.11% at 1.3784

EUR/USD  +0.02% at 1.1841

Oil edges higher on inventory data, OPEC+ stays the course

Oil is edging higher for a second straight session thanks to the weaker US Dollar and falling inventory data. EIA stockpile report revealed a 7.2 million barrel stock pile draw compared to expectations of a 4.4 million barrel decline. This marked the fourth straight week of declines. Total domestic stockpiles are 14.6% less than a year ago and 6% lower than the five-year average. There was some disappointment in the gasoline figures which unexpectedly rose.

The oil market is underpinned by a supportive macro backdrop amid widespread COVID vaccine rollout, government stimulus and OPEC supple curtailment. Yesterday OPEC agreed to go ahead with an output increase of 400,000 as planned.

US crude trades +0.59% at $68.68

Brent trades +0.64% at $71.99

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Looking ahead

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