Nikkei Falls 1 Percent

Asian markets were widely mixed as investors again fret about the tapering of the U.S. asset purchase program. The yen strengthened and we received better than expected economic data concerning the labor market out of the United States.

For the first time in two years, the U.S. 10 year Treasury note rose above 3 percent. This came after the weekly jobless claims fell to a five year low and the service sector growth rose to its highest level since December of 2005. We will be waiting on the ADP Non Farms-Payroll (NFP) due out later today, but the odds are once again in favor of the Federal Open Market Committee (FOMC) possibly tapering back the asset purchase program at its September 18 meeting.

STOCKS
The Japanese Nikkei 225 fell below the 14,000 mark as the yen strengthened fallen off the key $100 level versus the Dollar. The Australian benchmark, the S&P/ASX was off by 0.3 percent for today. The Shanghai Composite, on mainland China, has now hit a three week high and the Kospi, in South Korea rose to a three month high.

U.S. markets managed to squeeze out gains and extend to a three day winning streak. As mentioned above treasury notes did push higher above that psychological three percent mark for a bit before falling off a little. Please see the chart below following jobs data.

The DJIA rose nearly 7 points to close at 14,937.48. The index traded in a very tight 65 point range all day long. The S&P 500 rose 2 points to end at 1,655.08 and the tech heavy NASDAQ Composite rose nearly 10 points to finish at 3,658.78.

European markets closed higher after both the Bank of England (BOE) and European Central Bank left interest rates the same and kept an ultra-loose monetary policy. The BoE opted to leave its asset purchase program the same as well.

CURRENCIES
The EUR/USD (1.3132) fell sharply in overnight trading. We have broken below 1.3150 and can now test 1.3000. The Euro seems to be following the 2 year U.S. to German spread which has fallen to -0.23 percent and could now test support at -0.3 percent. Please see the EUR/USD chart below.

The GBP/USD (1.561) hit resistance at 1.567 yesterday and fell back a bit. We have support at 1.5570 which should hold today. The USD/JPY (99.76) saw a small correction from the high near 100.21. We are still bullish here and could test 102 or higher in the coming days and or weeks.

COMMODITIES
Brent WTI Crude (114.21) has risen and could now test 117.95 then 120.00 as investors fear an attack on Syria which could disrupt oil supplies. Gold (1371.20) has fallen and is now below 1375. We can now target 1350. With the dollar looking stronger, assets should be coming out of the yellow metal.

TODAY’S OUTLOOK
All eyes will be on the Non-Farm Payroll report due out later today. This will be one of the key determining factors to whether or not the FOMC will begin to taper back its QE program at the September 18 meeting. Also we have Fed Presidents Evans and George giving remarks today.