The last 24 hours was one of recent ranges as far as the major currencies were concerned on what was a very quiet trading session due mainly to the UK markets been closed, with the AUD/USD marking time ahead of the RBA decision overnight. As background to the $A, iron ore spot prices pulled back again yesterday by $0.95 to $56.18, gold rose 1.13% and LME copper by 1.0%. The VIX volatility index was little changed at 12.85, well within recent ranges. Equity markets were higher as were government bond yields, German 10y bunds up 8 bps to 0.45% and US 10y Treasuries up 3 to 2.14%. The final EZ Manufacturing PMI (April) was revised fractionally (higher). There was continuing commentary on Greece and almost a blaze acceptance that Grexit, should it arrive, might cause little market disruption.
We also had a speech from FOMC voter Chicago Fed President Charles Evans (Monetary Policy dove) who continued to offer his view that the Fed should delay raising rates until 2016. He sees the Q1 growth as likely mostly transitory but wants evidence that is the case. The Fed need not hurry to raise rates. John Williams, San Francisco Fed President (more neutral, also a voter this year) said it was good news that the economy was making “amazing progress”, speaking to an audience on small business developments.
The Fed’s quarterly Senior Loan Officers’ Survey reported little net change in loan demand from business. A special survey question on lending to the oil and gas sector reported some deterioration in loan quality, though for more than 80% of banks with such exposure, such lending is less than 10% of such loans.
Overnight China released it latest Manufacturing data which again disappointed. At 9.30 am we have UK Construction and this is followed at 10.00 am by European Commission Economic Forecasts. This afternoon the US will release its latest Trade Balance, Services PMI and the ISM Non-Manufacturing at 1.30 pm 2.45 pm and 3.00 pm respectively. Finally just before the US markets close this evening the Fed’s Williams will speak on Jobs at 8.10 pm.
As I managed to get internet access on my flight home the RBA have just announced a rate cut from 2.25% to 2.0%
June S&P 500
Yesterday the S&P had a very quiet trading session after the volatility of the previous two weeks. However the S&P plan worked out well as shortly after I posted the market traded higher to my 2111 sell level before having a nice sell-off into the close which enabled me to cover this position at 2106 and I am now flat. Today I will again look to go short on any further rally to 2113/2118 with a 2122 stop. I will leave my buy level unchanged at 2091/2096 with a 2086 stop.
EUR/USD
The Euro plan worked well yesterday as shortly after I posted the Euro traded lower to my 1.1130 buy level before having a nice rally which enabled me to cover this position at 1.1175 and I am now flat. Remember as long as the Euro can hold the strong support at 1.1050 then the market is fine but a break and close below here will be at least short-term bearish. Today I will again be a small buyer on any dip lower to 1.1070/1.1110 with a 1.1040 stop. My only interest in selling the Euro is still on a rally to 1.1250/1.1300 with the same 1.1330 stop.
June US Dollar Index
I am still flat the Dollar as the market just missed my 94.90 buy level before trading higher. I will leave my buy level unchanged at 94.70/95.00 while today I will also look to go short on any further rally to 95.90/96.20 with a 96.50 stop.
June DAX
The expected rally occurred in the DAX today but unfortunately the market spiked on the open which did not allow me to get long and I am still flat. Today I will raise my buy level slightly to 11460/11510 with a 11420 stop. I still do not want to be short the DAX at this time.
June FTSE
Shortly after the FTSE opened overnight the market traded higher to my 7010 sell level. I am still short and I will leave my stop the same at a very tight 7045.
Dow Rolling Contract
Just as I posted early yesterday morning I was stopped out of my 17960 short position from last Friday at 18040. Subsequently the Dow rallied to my 18110 sell level before having a nice sell-off into the close which enabled me to cover this position at 18050 and I am now flat. Today I will again look to go short on any move higher to 18120/18170 with a 18210 stop.
June BUND
The Bund has literally got slammed over the last week with Yields rising by nearly 45bps. The Bund is oversold after the recent sell-off and today I will be a small buyer from 155.10/155.50 with a 154.70 stop. Given the extent of the recent sell-off I do not want to be short the Bund at this time.
Gold Rolling Contract
My long 1174 Gold position from last Friday worked out very well yesterday as soon after I posted Gold started to rally which enabled me to cove this position at 1186 and I am now flat. Today I will again be a small buyer on any dip lower to 1174/1181 with an 1167 stop.
Silver Rolling Contract
No change as I am still long from last week at 16.45. Given the recent rally in Silver I will raise my stop on this position to 15.90.
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