S&P 500: on the eve of the NFP

 
 
 
 
 
 
 

As expected, 9 members of the Monetary Policy Committee (MPC) of the Bank of England voted to raise interest rates by 0.50% to 1.75%. This was the bank's most significant monetary tightening since 1997.

The leaders of the Bank of England raised the interest rate to curb inflation.

 Meanwhile, the market is preparing to meet tomorrow's publication (at 12:30 GMT) of the monthly report of the US Department of Labor with data on the state of the US labor market for July. This publication is extremely important for market participants: data on the state of the labor market (along with data on GDP and inflation) are key for the Fed in determining the parameters of the current monetary policy. According to the forecast, 250,000 new jobs were created in the US economy in July, salaries of employees continued to grow, and unemployment remained at 3.6%, the same as in June, May, April and March. These are the lowest levels of unemployment over the past few years, correlated with pre-pandemic levels.

Overall, the data points to a continued improvement in the US labor market, which remains a bright spot in the deteriorating US economy.

In this regard, investors will also pay attention today to the publication at 12:30 (GMT) of fresh weekly data from the US labor market, which includes a report on the number of applications for unemployment benefits.

Initial and repeat jobless claims are expected to remain at pre-coronavirus lows, which is also positive for the dollar, indicating the stability of the US labor market.

Previous (weekly) figures for initial jobless claims: 256K, 251K, 244K, 235K, 231K, 232K, 202K, 211K.

Previous (weekly) values of the repeated applications for unemployment benefits:

1359 thousand, 1384 thousand, 1333 thousand, 1372 thousand, 1324 thousand, 1331 thousand, 1309 thousand, 1309 thousand.

And yet, on the eve of tomorrow's publication of data from the US labor market, investors are reserved about the idea of ​​buying the dollar: the DXY dollar index is falling again today after a sharp increase the day before against the backdrop of a visit to Taiwan by Speaker of the US House of Representatives Nancy Pelosi. The visit took place, the markets calmed down, the dollar went down.

DXY

At the time of publication of this article, futures for the DXY dollar index are traded near 106.27 mark, above the local support level 106.00.

An additional signal for the resumption of long positions in DXY futures will be a breakdown of the local resistance level 107.00.

S&P500

Meanwhile, some easing of geopolitical risks was reflected in the growth of stock indices. In particular, the US broad market index S&P 500 yesterday broke through the strong resistance level 4139.00 and today came close to the key long-term resistance level 4180.00, which separates the bullish from the bearish trend. A break of this resistance level will resume the multi-year S&P 500 bullish trend.