Three solid sessions put the ASX 200 back at 5,600, US unemployment at 5.3%, ASX futures down 19 points

The ASX 200 has enjoyed three bullish sessions since the open on Tuesday, and 'bullish' not simply due to the fact that they were all net positive days. Tuesday's close was just 7.6 points shy of its intra-day high, Wednesday's close was its sessions high, and yesterday's close was 10 points from the session high. These strong closes represent confident buying in the Australian market and the further we move away form the ASX 200's recent intra-day low of 5,390.50, the greater the buffer available to traders who will look to add risk to long trades, so long as the index does not fall back past that 5,390 point.
The official unemployment rate in the US continued to fall last night, as the addition of 223,000 jobs pushed unemployment down to 5.3%, which was 0.1% lower than expected and 0.2% lower than the previous month. Despite the good looking headline rate, however, average hourly earnings didn't move, the previous figure for May was revised down by 60,000 jobs and much of the reasoning behind the fall to 5.3% was chiefly because people left the workforce and thus the number of Americans actually working or looking for work fell by 0.3%. As such, overall strength in the labour market in the US may not be seen by the US Federal Reserve as having improved and thus I do not think that this report was significant at all with regard to the timing of the first interest rate hike in the US. This is further evidenced by the benign move in the US dollar index. In today's second chart you can see that while there was some volatility in the US dollar when the announcement was made, it actually weakened over the session. A lower US dollar index suggests that traders are not increasing their bets of an early rate hike.
In today's last chart I've covered US dollar spot gold and silver. While occasionally threatening to trade higher since their March lows, these precious metals seem to be resuming a broader down trend that has been in place since May. In particular, spot silver (the black line) seems to be making a series of lower highs on its way down and requires a lot of consolidation before it can show signs of buying support.
Source: Rivkin, Saxo Bank

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This article was written by Scott Schuberg, CEO of Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3600.