FX and markets in general ended the week with more of a whimper than a bang with no dramatic surprises from the US Economic calendar after the drama over the previous 3 days. US Equities gave back half of Thursday’s gains with the S&P 500 and the Dow both loosing 0.6% and 0.7% respectively. US Bond yields were fractionally lower whilst Gold was up $12 at $1390. Oil was the big mover, up over a dollar, on rising Middle East tensions.
In the US, the Univ of Michigan Consumer Sentiment Index fell to 62.7 from 64.5 whilst Industrial Production came in flat against a rise of 0.2% expected. The June dip in Consumer Sentiment is off its highest level since mid-2007 and it is the size of the jump last month that looks to have been somewhat exaggerated rather than the small dip in June that is relevant here. Perhaps more notable than either of the above was the US April TICS (capital flows) Report, which revealed a sale of long term securities (Bond and Equities) by foreign investors totaling $37.3 billion in April with net sales of Treasury Securities a massive $54.5 billion.
After last weeks turmoil it looks like global markets will be quieter this week in anticipation of the FOMC meeting on Wednesday and Bernanke’s press conference afterwards. So far today, the Nikkei has already closed 2.4% higher this morning and European markets are opening higher.
On the economic front today we have Euro-Zone Trade Balance and Employment followed in the US by the Empire Manufacturing Index.
June S&P 500
Given the fact we have the FOMC meeting starting tomorrow I would expect the markets to be quiet to higher ahead of Wednesday’s announcement. The fact that this is the last meeting until September we should get a lot of volatility after Bernanke speaks. On Friday, the S&P having opened higher spent the rest of the day falling and indeed closed on it’s lows but the markets are better this morning on the stronger Nikkei and weaker Yen from Japan.
The market dropped down to my 1628 buy level on Friday and I have just cut this position this morning at 1635 and I am now flat. My idea this week is to buy dips until the FOMC meeting and then be flat until after Bernanke’s press conference. Today I will be a small buyer again on any dip to 1625/1629 with a 1622 stop which is just below the low made on Friday. I do not want to be short this market ahead of Wednesday.
Euro/USD
The Euro traded up to my 1.3350 sell level overnight and as a result I am short in small size. I will lower my stop to 1.3395 which is just above the highs made last week as I am encouraged that the Euro did not trade higher following the release of the TICS data on Friday.
June DAX
The Dax worked really well on Friday as the Dax traded up to my 8160 sell level before having a nice correction. I covered my short position at 8110 and I am now flat. Today I will be a small seller on any further rally to 8190/8220 with a 8235 stop.
June FTSE
The FTSE traded down to my 6295 buy level after I posted on Friday and I was able to cover this position at 6330 after the US market opened and I am now flat. Today I will look to reset my long position on any dip to 6290/6310 with a 6275 stop which is just below Friday’s lows.
September BUND
The Bund continues to rally off last Wednesday’s low. I still like the Bund and, like the S&P, my idea is to buy dips in this market, therefore today I will be a small buyer on any dip to 143.10/143.30 with a 142.95 stop.
June Nasdaq 100
No change from Friday as I am still a buyer on any dip to 2920/2940 with a 2195 stop. I will also look to sell the market on any further rally to 2990/3010 with a 3025 stop.
September Nikkei
The Nikkei dropped down to my 12800 buy level after I posted on Friday and I held my small long position over the weekend. This morning, the market on the back of the weaker Yen has had a nice rally and I have covered this position at 13100 and I am now flat. Today I will still be a buyer on any dip to 12700/12850 with the same 12500 stop. I will also be a very small seller on any rally to 13650/13800 with a 13950 stop.
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