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All eyes on the Canadian September jobs report

Four key markets in focus today.

USD/CAD

At 11:30 we receive the Canadian September jobs report, with the market expecting 10,000 jobs to have been created. The unemployment rate is also expected to stay on hold at 7.1%, while there shouldn’t be any change to the participation rate. Strong support has been at 1.0371, so good jobs numbers could see this being tested and potentially broken. With House Republicans putting out a proposal to extend the debt ceiling until November 22, the market has reversed a number of its armageddon trades, although USD/CAD hasn’t really moved anywhere near as much as the JPY crosses.

US 500 cash (S&P 500)

The US market had its best one-day gain since early January, with all sub-sectors rallying between 1.4% and 2.9% (financials). Volume was 5% above the year’s average, with 98% of stocks on the day rallying. The S&P 500 is now only seventeen handles or 1% away from printing a new all-time high. All eyes now fall on JP Morgan and Wells Fargo’s Q3 earnings, with both companies reporting pre-market. Buying dips is my preferred way of playing this market, and despite the Republican deal effectively only prolonging pain for another six weeks, we know US politicians are watching polls and are adamant to avert a default. I expect a break of 1709 (the all-time high) in the short-term, however it’s worth remembering that there hasn’t been any agreement on the budget and the White House hasn’t actually agreed anything yet.

JP Morgan (JPM)

I was looking at long positions yesterday with a potential stop under $50. With JPM rallying 3.4% yesterday, I would look to exit the trade on a daily close below $50.78 (the 200-day moving average), with a move to $54.00 - a level I’d be happy to lock in potential short-term profits. JPM reports pre-market (expected around 22:00 AEST) and the market is keen to hear more on clarity around its legal issues, while its capital markets business will likely perform well and should outperform its peers.

Spot gold

I’ve been looking at short gold trades for some time and still have conviction that short positions are the best way to trade. The trend is lower and selling rallies is preferred and I would add to shorts on a close below $1277 (the October 2 low and 61.8% retracement of the $1180 to $1433 rally). The US debt ceiling debate is clearly adding sentiment, while a move higher in US bond yields is also making traders look at the opportunity cost of holding gold. I would stay short on gold, adding on a potential daily close below $1277.

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