Wakeup Call

Keep an eye on ISM Non-Manufacturing today

Keep an eye on the ISM Non-Manufacturing today as it is still expected to come out below 50 (meaning contraction). A reading above 50 would translate into a rally in stocks.

What's going on?
Theme Comment

FOMC Minutes reveal discussions about ending the QE for Agency and Mortgage Backed Securities, although rates should still be kept very low. Some members feared a “substantial” decline in inflation (i.e. more deflation) and there is still a considerable weakness in the labor market, which needs to improve before rates can be hiked again. The STIR Futures market is still indicating that the first chance of a rate hike is March-May 2010.

· The ADP Employment Change yesterday showed that the labor market was deteriorating less rapidly than in July, but this notion is not corroborated by the Weekly Initial Jobless Claims.

· Keep an eye on the ISM Non-Manufacturing today as it is still expected to come out below 50 (meaning contraction). A reading above 50 would translate into a rally in stocks.

FX

EURUSD : Likely to be capped at 1.4290-00. Sell rallies for re-test of 1.4220-25, stop abv 1.4330

USDJPY : Resistance still 132.50 for break below 131.0 to target 129.50-70 m/term

EURJPY : 91.90-00 now critical support. Below targets 91.25 else 92.00-92.75 range

GBPUSD : MA res 1.6285-90. Sell into there for 1.6225 else buy break above for 1.6350-60

Equities

DAX : Buy around 5280 targeting 5326. S/L below 5260.

FTSE : Buy around 4782 targeting 4817. S/L below 4769.

S&P500 : Buy at the break of 1000 targeting 1006. S/L below 996.

Futures
Commodities

Gold : Sell on rallies towards 980.50 and target 971. Stop above 982.

Silver : Neutral. Risk-reward not convincing.

Oil : Sell on rallies towards 69 and target 67. Stop above 70.