An interesting session yesterday with disappointing US ADP employment and ISM Manufacturing reports against an upward revision to Euro-zone preliminary Manufacturing PMIs seeing support for the Euro and a sideways-to-lower movement in the US Dollar. It seems that the market is still waiting for Non-Farm Payrolls tomorrow to make any new substantial moves, the market still wanting to believe that the Fed is on track for rate lift-off over the next few meetings.
US data with the overnight global dairy auction seeing prices down 10.8%, the single biggest decline since mid-2010. Ahead of payrolls, the US ADP employment report disappointed though it’s not been a very reliable lead at all into payrolls. But the US ISM manufacturing index printed at 51.5, the lowest since May 2013 and now even below its Euro-zone counterpart that was revised up to 52.2 from the preliminary 51.9. The export orders component remained below 50 at 47.8, having receded for six months and held back by a stronger USD and soft overseas demand.
Despite higher oil and lower US Treasury yields, US equities again closed lower yesterday after another extremely volatile trading session. ‘Oil-linked’ currencies (CAD, NOK) were amongst the stronger performers from higher oil prices. WTI oil is up 4.2% to US$49.59/barrel. A US government report showed US crude production has dropped back a little from its highest level in more than three decades.
The JPY was softer early in the session after yesterday’s disappointing Japan Tankan survey. Last evening Abe’s aide Yamamoto was quoted as saying the BoJ must ease again at the end of the month. “To do nothing isn’t an option”, he said, adding “further monetary policy easing is absolutely essential to ensure that the Japanese don’t slip back to a deflationary mindset”. However, from late yesterday highs above 120.30, the yen rallied after the disappointing US data with USD/JPY trading at 119.65/70 at the open this morning.
This morning on the economic front we have no data of note due from the Euro-Zone or the UK due primarily to the Easter Holidays. At 1.30 pm we have the US Weekly Jobless Claims and Trade Balance. Finally at 2.45 pm and 3.00 pm we have the New York ISM and Factory Orders respectively. This afternoon Fed Chair is due to speak at a US conference.
Despite all European and US markets been closed tomorrow for the Good Friday Holiday, the US will release its Non-Farm Payrolls Report at 1.30 pm which is expected to show an increase of 253K versus last month’s 295K rise.
Note that with all markets closed tomorrow my next update will be on Monday April 6. Finally I would like to wish all my members a safe and happy Easter.
June S&P 500
The S&P plan worked out very well as shortly after I posted the market was trading at my 2057 sell level. Subsequently having gone short the market the S&P got hit hard to the downside by making a low at 2040 which enabled me to cover my short position at 2045 and I am now flat. As I mentioned yesterday the key support for the S&P is from 2035/2040 and a break and close below here will be extremely bearish. With Non-Farm Payrolls due tomorrow, we may have a quieter trading session today. If the S&P trades higher I will again be a small seller from 2059/2065 with a 2071 stop. I will also be a small buyer on any further dip to 2034/2039 with a 2029 stop. If I am taken long I will look to cover this position this evening as I do not want to be long ahead of tomorrow’s Payrolls especially with the markets closed for the Good Friday Holiday.
EUR/USD
The Euro plan also worked well yesterday as shortly after I posted the Euro traded lower to my 1.0730 buy level before having a nice rally which enabled me to cover this position at 1.0780 and I am now flat. The Euro is back trading over 1.0820 this morning and I cannot see the Euro falling much ahead of tomorrow’s Payroll data. Today I will look to buy the Euro on any dip lower to 1.0760/1.0790 with a 1.0725 stop. I still do not want to be short the Euro at this time.
June US Dollar Index
No change as I am still short from last Tuesday at 99.00. With the Dollar Index finally lower this morning I will lower my stop to 98.50 on this position. If I am stopped out of this trade I will be a more aggressive seller in front of 98.80 with a 99.30 stop.
June DAX
With the extreme volatility that ensued in both directions in the DAX after I posted yesterday morning I definitely took the right decision to stand aside and observe the market. However I have to respect the fact that the DAX closed above the key 11940 pivot point, and as a result I will be a small buyer on any dip lower to 11920/11960 with a tight 11890 stop. I still do not want to be short the market at this time as every time the DAX dips it is met by a wave of new buying.
June FTSE
The FTSE plan also worked well yesterday as shortly after I posted the FTSE was trading at my 6790 sell level. The market had a nice move lower overnight which enabled me to cover this position at 6750 and make up for my loss that I took on Tuesday and I am now flat. Today I will again be a small seller on any rally higher to 6790/6820 with a tight 6840 stop as the 6820 level is now key resistance. My only interest in buying the market is still on a dip to 6640/6670 with a 6595 stop. The closer we get to the UK Election volatility in the FTSE and Sterling will start to increase.
Dow Rolling Contract
Finally the Dow traded higher to my 17790 sell level after I posted yesterday morning. Subsequently after going short the Dow got slammed. The fact that we have the three confirmed Hindenburg Omen signals on the clock coupled with my worries for the overall Dow Index, I only covered half my positon at 17670. I will leave a breakeven stop on the other half. If I am stopped out of this position I will be a more aggressive seller on any subsequent rally to 17820/17870 with a 17930 stop.
June Bund
Very late in yesterday’s trading session the Bund rallied to my 159.10 sell level. I am still short and today I will lower my stop to 159.25 on this position.
Gold Rolling Contract
When I wrote yesterday morning that I was surprised that Gold was not trading higher I should have just pulled the trigger instead of waiting, especially with Gold trading at 1205 this morning. Today I will raise my buy level to 1188/1196 with a 1177 stop which is just below last Monday’s low.
Silver Rolling Contract
No change as I am still long at 16.90. The fact that Silver is back trading higher this morning I will raise my stop to 16.50 on this position.
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