Feeding off the China trade data-inspired run up in risk sentiment US Equities posted gains of 0.5%-0.7% yesterday. The only data of note was the Weekly Jobless Nos which were basically unchanged from last week. The big news was the Dragi Press Conference where he made clear that a rate cut is no longer being discussed. Rather he expressed confidence that the reduction in financial market fragmentation mitigated the need for rate cuts and expressed some optimism that growth would start to recover later in 2013. The Euro went on a tear after the rate inaction and Dragi’s subsequent comments adding more than 150 points versus the US Dollar. Some interesting comments from James Bullard of the St Louis Fed saying he is a little disturbed by Japan’s explicit exchange rate policy and says that the ‘beggar thy neighbour’ policy won’t bring good outcomes. That may be so but this looks like a case of the pot calling the kettle black. US Dollar depreciation policy may not be explicit, but it is a direct and desirable consequence of Fed Monetary Policy settings.
There is very little of note on the economic front today with the US Trade Nos at 1.30 pm the highlight.
March S&P 500
Another very frustrating day for me in the S&P as I planned for the market to trade higher and emphasised not to be short in my update, unfortunately the market just missed my 1454 buy level with a 1456 low shortly after the open in the US. As I commented over the last few days I expect the S&P to make a new high which it did last night and we have
now closed at a 5 year high. Although the market is overbought I expect it to trade higher and today I am a buyer on any dip to 1465/1469 with a 1462 stop. Again I do not want to short the market at this time.
Euro/USD
Very frustrating as I expected Dragi to be hawkish in his press conference yesterday as the Euro just missed my 1.3020 buy level before going on a run to the upside. Today the Euro is approaching the very important 1.3300/1.3320 resistance and a closing break here will be very bullish. Today I am a small seller from 1.3300/1.3325 with a 1.3340 stop. I will also look to buy the Euro on any dip to 1.3200/1.3230 with a 1.3190 stop.
USD/JPY
This currency pair continues to trade higher but after the comment from Bullard yesterday I am loathe to stay in this trade any longer. Bullard’s comments are a strong sign that Japan is not going to get the blessing of international counterparties for its policy of explicit depreciation. Today I am a seller in small size from 89.20/89.50 with a 89.70 stop.
March FTSE
The FTSE worked well yesterday as the market dropped down to my buy zone after the US market opened and I bought the market at 6048. I will raise my stop to 6030 and I will also look to take profit on any rally to 6095/6115.
March BUND
The Bund got killed after Dragis comments and I was stopped out of my 143.15 long at 142.90 and I am now flat. I will attempt to rebuy it on any dip to 141.70/142.00 with a 141.60 stop.
Nasdaq 100
As I said last week, I am a seller on any rally to 2790/2810 with a 2825 stop.
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