This is not a correlated market. The dollar is Up+ and Crude is Up+ which is not normal but the 30 year Bond is trading Lower. The Financials should always correlate with the US dollar such that if the dollar is lower then bonds should follow and vice-versa. The S&P is Lower and Crude is trading Higher which is correlated. Gold is trading Higher which is not correlated with the US dollar trading Up. I tend to believe that Gold has an inverse relationship with the US Dollar as when the US Dollar is down, Gold tends to rise in value and vice-versa. Think of it as a seesaw, when one is up the other should be down. I point this out to you to make you aware that when we don't have a correlated market, it means something is wrong. As traders you need to be aware of this and proceed with your eyes wide open. All of Asia is trading Lower. Conversely all of Europe is trading Higher.

Possible challenges to traders today

Challenger Job Cuts y/y is out at 7:30 AM EST. This is Major.
Unemployment Claims is out at 8:30 AM EST. This is Major.
Final Manufacturing PMI is out at 9:45 AM EST. This is Major.
ISM Manufacturing PMI is out at 10 AM EST. This is Major.
Construction Spending m/m is out at 10 AM EST. This is Major.
ISM Manufacturing Prices is out at 10 AM EST. This is Major.
Wards Total Vehicle Sales - All Day. This is Major.
Natural Gas Storage is out at 10:30 AM EST. This is Major.

Bias

Yesterday we gave the markets a Downside as both the USD and the Bonds were trading Higher Thursday morning and that is usually indicative of a Downside day. The markets had other ideas as the Dow closed Higher by 210 points, the S&P was Higher by 6 and the Nasdaq traded Lower by 24. Today we aren't dealing with a correlated market and our bias is Neutral.

Could this change? Of Course. Remember anything can happen in a volatile market.

Commentary

Each and every day we say that the markets could change and they often do. Yesterday was no exception as the markets were correlated Lower but the economic news reported came in mainly positive and served to drive the markets Higher. ADP Employment Change came in at 692,000 versus 555,000 expected. Pending Home Sales came in much higher than the previous period at 8.0% versus a minus 4.4% reported last month. Today we have about 8 major economic reports that could serve to drive market direction today. Such reports as Total Vehicle Sales, Unemployment Claims, Construction Spending are all major and proven market movers. But as in all things only time will tell...

Author

Nick Mastrandrea

Market Tea Leaves

EUR/USD flat lines below 1.1900; divergent Fed-ECB expectations offer support

The EUR/USD pair struggles to capitalize on the overnight bounce from the 1.1835-1.1830 region and oscillates in a narrow band during the Asian session on Thursday. Spot prices currently trade around the 1.1875 area, remaining nearly unchanged for the day and staying within striking distance of an over one-week high, reached on Tuesday, amid mixed cues.

GBP/USD slips heading into the Thursday trading window

The Pound Sterling pulled back from four-year highs on Wednesday, weighed down by a combination of Bank of England dovishness and UK political uncertainty, even as the US Dollar weakened on soft labor market revisions.

Gold holds losses near $5,050 despite renewed USD selling

Gold price trades in negative territory near $5,050 in Thursday's Asian session. The precious metal faces headwinds from stronger-than-expected US employment data, even as the US Dollar sees a bout of fresh selling. All eyes now remain on the next batch of US labor statistics.

Crypto trades through a confidence reset

The cryptocurrency market is navigating a liquidity-driven reset rather than a narrative-driven rally. Bitcoin, Ethereum and major altcoins remain under pressure even as new exchange-traded fund filings continue and selected inflow days appear on the tape.

The market trades the path not the past

The payroll number did not just beat. It reset the tone. 130,000 vs. 65,000 expected, with a 35,000 whisper. 79 of 80 economists leaning the wrong way. Unemployment and underemployment are edging lower. For all the statistical fog around birth-death adjustments and seasonal quirks, the core message was unmistakable. The labour market is not cracking.

XRP sell-off deepens amid weak retail interest, risk-off sentiment

Ripple (XRP) is edging lower around $1.36 at the time of writing on Wednesday, weighed down by low retail interest and macroeconomic uncertainty, which is accelerating risk-off sentiment.