The Euro-zone preliminary PMI readings for May hit the screens early in the European session, revealing something of a net recovery for the Euro-zone, the Manufacturing Index up to 52.3 from 52.0. France did better (strictly less worse at 49.3 from 48.0), while Germany slipped to 51.4 from 52.1. The small net improvement was a tad better than expected and gave some support to the Euro mid-session in the lead up to the US session and data. A tripartite heads of state meeting between Hollande, Merkel and Tsipras is taking place after an EU Heads of State meeting in Riga, Latvia. Hollande has been on the wires expressing confidence a deal can be struck by Finance Ministers on Greece by late May/ early June.
Sterling was the one currency that did get a noticeable boost after the release of much better than expected April Retail Sales, rising by 1.2% against expectations of a 0.4% increase. The ONS put this down to better weather and is a positive start to consumer spending for this quarter. There was a swathe of US data, two regional manufacturing reports for May (both missing expectations), Jobless Claims broadly in line, the Chicago Fed National Activity Index missing as did the Existing Home Sales Report.
Though not the most sensitive reports, they play a little into the softer US story; the Leading Index was the exception, boosted by the recently reported jump in Building Permits. The US Bureau of Economic Analysis is saying that they are re-examining the seasonal adjustment of GDP with hints of still residual Q1 weakness claimed by some, including some regional Feds, though not apparently by the Fed researchers in Washington. Watch this space for any update that would be reflected in revisions when the Bureau publishes their preliminary Q2 GDP report on July 30.
The ECB’s Draghi and Fed Vice-Chair Stanley have been speaking at an event in Portugal on EU unemployment, Draghi saying that while growth has improved somewhat, growth is still too low everywhere. Fischer has said that the Euro appeared to have weathered the crisis but that it would only be a success if it brought prosperity to its members.
This morning on the economic front we have the German IFO Survey which will be released at 9.00 am. This will reveal the Business Climate, Current Assessment and Expectations. Finally at 1.30 pm we have US CPI.
Please note that as this coming Monday is a Bank Holiday in England and as the US Markets are also closed for the Memorial Weekend the next update will be on Tuesday May 26
June S&P 500
Yesterday was one of the quietest trading sessions of the year so far with most traders leaving early for the Memorial Weekend Holiday. Today promises to be as equally as quiet and it will be probably next Tuesday before we see normal trading resume. Late in yesterday’s trading session the S&P spiked higher to my 2131 sell level. I am still short and I will leave my stop the same at 2138 on this position. I will also raise my buy level higher to 2115/2121 with a 2111 stop on any long position.
EUR/USD
The Euro plan worked well as shortly after 8.00 am the Euro traded lower to my 1.1080 buy level before having a nice bounce on the Euro-Zone PMI readings which enabled me to cover this position at 1.1145 as outlined in my Platinum Service and I am now flat. Today I will again be a small buyer on any dip lower to 1.1045/1.1075 with a tight 1.1025 stop. I still do not want to be short the market at this time.
June US Dollar Index
My short 95.80 Dollar position from last Wednesday also worked well yesterday as the market had a nice drop which enabled me to cover this position at 95.40 and I am now flat. Today I will again be a small seller on any rally higher to 95.90/96.20 with a tight 96.40 stop. I still do not want to be long the Dollar at this time.
June DAX
No change as I am still a small seller on any rally higher to 11930/11980 with a wider 12050 stop. I still do not want to be long the DAX at this time as I do not believe the Euro will stay low for much longer.
June FTSE
I am still flat as the FTSE has traded in a very narrow range over the past week. I would expect today to be also very quiet especially with the markets closed on Monday. Today I will still be a small buyer on any dip to 6910/6940 with a tight 6885 stop. I am also still a small seller on any rally higher to 7035/7060 with the same 7085 stop.
Dow Rolling Contract
The Dow traded much heavier in yesterday’s trading session in comparison to both the NASDAQ and the S&P. I am still flat and today I will again be a small seller on any rally higher to 18380/18420 with an 18460 stop. I still do not want to be long the market at this time.
June BUND
The Bund just missed my 154.20 sell level before trading lower and I am still flat. Today I will leave my sell level the same at 154.20/154.45 but this time only in half size as a break and close over 154.50 will be short-term bullish and opens up the possibility of a move higher to 156.50 before sellers return. For this reason I will also be a small buyer on any dip lower to 153.25/153.55 with a 152.85 stop.
Gold Rolling Contract
No change as I am still long at 1212 with the same 1199 stop. Again if I am stopped out of this position I will be a more aggressive buyer in front of 1190 with an 1179 stop.
Silver Rolling Contract
Still no change as I am still long at 17.10 with the same 16.80 stop which came close to been hit yesterday. If I am stopped out of this position I will be a more aggressive buyer in front of 16.50 with the same 15.90 stop.
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