Today’s NFP Likely to be a Non-event as Investors Remain Focused on Stimulus

February’s non-farm payrolls report wasn’t particularly stunning. Traders were looking for a headline number of 191,000 and received one below expectations at 151,000. There was also steady growth in wages and a drop in the unemployment rate. Today’s report is expected to show an increase of 195,000 jobs.

Stocks, gold and the U.S. Dollar all declined until February 11 after the release of the report on February 5. The 10-Year Treasury Notes futures contract rose slightly. One could say the reaction was mixed based on the reactions by the four asset classes.

Days after the report, talk that the Fed may not raise interest rates in 2016 began to surface. Traders cited stock market volatility, additional stimulus from other central banks and a weakening Chinese economy as reasons for the Fed to pass on its plan to raise rates perhaps as much as four times this year.

While investors were saying conditions weren’t ripe enough for a rate hike, Fed Chair Janet Yellen was telling Congress that the central bank would continue to monitor the situation and that it hadn’t abandoned the possibility of number rate hikes.

Since the last report June 30-Year Treasury Bonds are up 0.01%. June 10-Year Treasury Notes are up 0.03%.

The March U.S. Dollar Index is up 1.15% while April Gold is up 8.70%.

The Dow has rallied 3.62%. The S&P 500 4.34%. The NASDAQ-100 3.96% and the Russell 2000 Index 6.36%.

Clearly, this was a strange reaction to the Feb jobs report if the report was the driving force behind the price action. Gold and the Dollar up at the same time? Gold and stocks posting solid gains? Weren’t we told that gold and the dollar tend to move in opposite directions and that gold is a safe haven when stocks decline?

The point I’m trying to make is that today’s jobs report is not likely to have much of an impact on the near-term direction of the major markets. Investors aren’t focusing anymore on how many jobs the U.S. economy has created. Investors are more concerned about the global economy and how much stimulus the European Central Bank, the Bank of Japan and the People’s Bank of China will continue to pump into their economies.

So while we are likely to see volatility today and a possible two-sided trade due to the nature of the report, I don’t think it’s going to have much of an effect on the currently established trends. I believe that stock investors feel the same way because based on the price action this week, I don’t sense any fear from them about being long into the report.

Technically, stocks could produce a potentially bearish closing price reversal top, but I don’t believe it will be a trend changing event. It will probably be a reaction to overbought markets. Gold traders don’t appear to be too concerned about the report either with the April contract reaching a new high for the month yesterday.

U.S. Dollar

U.S. Dollar traders also seem to be unconcerned about the report with the index straddling a retracement zone. However, based on the chart pattern, the March U.S. Dollar Index appears to be in a position to move in either direction in a big way. Look for a potential breakout to the upside on a sustained move over 98.17 and a breakout to the downside on a sustained move under 97.615.

Gold

Based on Thursday’s close at $1258.20 and the early price action, the chart pattern suggests gold could have a wide range over the near-term.

The first upside target today is a steep uptrending angle at $1300.50. Crossing to the strong side of this angle will put gold in a bullish position with the next major target the January 21, 2015 main top at $1308.50. This is also the trigger point for a possible surge into $1321.30.

On the downside, gold has a minor target at $1212.00. The main targets are $1207.30 and $1204.50. These are uptrending angles that have guided the market higher for several weeks so there could be a technical bounce on the first test of this area. This is followed by $1191.50.