The US equities market could keep its recent gains of yesterday. The Dow could close up by 19 at 8740 recording a new high of this year at 8760 during this optimistic session. God Willing, The markets eyes will be focused on the release of May US ADP employment figure as a key of the non-farm payroll of the same month which is waited to come by the end of the week showing a fewer number of lost jobs in US at -520k in May from -539k in April. The US private sector is expected to show a losing of another 550k jobs in May today and also we wait for the US ISM non-manufacturing index which is expected to reach 45 in May from 43.7 following the US ISM manufacturing index which improved to 42.8 from 40 in April in the same gradual pace of recovery as the Fed's reference recently.
The greenback was under significant pressure recently on these strong gains of the equities markets and the increases of the risk appetite. The gold was also underpinned by the rising of the commodities and energy prices amid the current cheeriness of a closer recovery later this year which can increase the demand of them again. The price paid index of the ISM manufacturing index of May has come up to 43.5 from 35 in April to ensure this current market believe in growing the inflation upside risks coinciding with the recovery which should support the gold as a mirror of the inflation. The gold has met a resistance previously at 970$ which was the lower high of this year on March after the formed high of Feb at 1006$ but getting above it last week and testing it in the beginning of this week as a support makes the 1000$ psychological level very vulnerable right now. The gold could form double bottoms last month at 864.90 and 864.50 and then started to make higher lows at 878.85$, 914.95$ and 945$ and now at 970$.
Recently, the worries about the demand for the US treasuries could contain the market sentiment increasing the market speculations of a Fed's hiking interest rate for attracting demand for these treasuries. These worries about losing confidence in the US treasuries could temper the market and brought this issue on Timothy Geithner visit agenda to China to store the biggest treasuries buyer confidence in the US debit holding in spite of the recent US quantitive easing steps which exposed the US debit to the mortgages bad loans by replacing them with US treasuries. In this same time, the US treasuries are still the Fed's preferred way to pump funds and easing by its adopted quantitive easing policy after losing the cutting interest rate tool to afford the required liquidity for the government to clean the banks balances sheets and to spur growth moving in its rescue financial plans for a promising recovery can start later this year and store the confidence in the US economy again. Timothy's language was very friendly referring to the required strong relationships between US and china to corporate get out of this crisis and China believes in the US ability to recover and from the Chinese side, there is no other option can replace its holding of US dollars currently.
If these tries failed and the this waited recovery delayed , the greenback can be under the threat of selling off the US treasuries which can force the Fed to hike the interest rate for adding attractiveness to them which can tackle the recovery which is already waited to come in a gradual pace as they have remarked formerly which makes the market serious question right now is whether these toxic assets which caused the problem and dampen the US banking sector could poison the US creditability and total economy or not and the answer is still in this struggling waited recovery.