A Greek Referendum and Iranian Nuclear Deadline Raise the Stakes
Markets are abuzz with expectations regarding the Greek referendum outcome with polls showing an even split ahead of Sunday’s vote. At this point he vote is too close to call, however, Tsirpas and Varoufakis have emerged with a trump card following revelations of a report prepared by the IMF stating that the Greek debt haircut would need to be bigger than previously estimated. This adds to momentum to the "no” vote ahead of a critical period for the Greek economy as banks bleed deposits and cash levels running exceptionally low. With the mounting uncertainty going into the weekend, there is strong potential for a volatile Monday reopening depending on the results of the vote.
Across the Atlantic, employment numbers released by the Bureau of Labor Statistics left a lot to be desired as far as confirming a strengthening US economy. The nonfarm payrolls number came in below estimates of 230,000 jobs added, printing at 223,000 with the prior months figure revised substantially lower. More concerning was the drop in labor force participation with over 93 million eligible working Americans now outside the labor force. While the unemployment rate dipped from 5.50% to 5.30%, this was driven primarily by exits from the labor force. Also not helping the recovery was flat wage growth, with average hourly earnings showing zero growth. Besides losses in the dollar, benchmark indices closed the cash session lower on the softness in labor data.
Gold prices were sensitive to the labor reports as losses in the dollar saw gold prices surge back from multi-month lows of $1157 per troy ounce, trending closed to $1170 as dollar losses mount. With inflation remaining subdued, precious metals are taking their cues from momentum in the dollar as the main driver of pricing. The oil patch has continued to slide amid yesterday’s report from Baker Hughes showing a reversal in the slide in the drill rig count. Twelve rigs were added last week, the first uptick in the number since December when the slide began. Coupled with the emerging Iranian nuclear deal and production at cycle highs across the globe from America to Russia, there is strong propensity for the a renewed slide in oil prices.
Nasdaq Futures Ascending Triangle Trading Opportunity
Amid the turmoil across the Atlantic in Europe, the Nasdaq opened the week to substantial losses with futures ticking lower, mirroring losses in other global benchmarks. The rebound over the course of the week comes as stronger data and improving fundamentals boost the prospect of interest rate liftoff in September. Even though NFP was not viewed under a positive light, it still contributes to the prevailing sentiment with Nasdaq futures trending back towards resistance. The consolidation between the near-term uptrend and resistance at 4441 is forming an ascending triangle pattern with a bullish bias. A move above resistance would be viewed as a breakout trade opportunity to be accompanied by renewed volume and momentum higher.
Wishing You a Successful Trading Day,
NetoTrade Analysts Team