After I posted earlier this morning the RBNZ announced a further cut to its OCR by 25bps to 3.00% with the language from the RBNZ seemingly less anxious about the Kiwi, with the Central Bank previously describing the Kiwi as unjustified and unsustainable. I expect another cut at its September meeting. Initial reaction has seen the Kiwi rally modestly, with the absence of a 50bps move and more moderate language on the flightless bird supportive. As for yesterday’s trading session, it’s been light for economic news as the market centred on the US earnings season and some side action on declining Oil prices that saw the CAD and the NOK underperform.
For anybody following my New Platinum Service it made 85 points yesterday and is now ahead by 1435 points for the month of July. Last month the Service generated a total of 3045 points.
Notwithstanding that US earnings have been weighed down by tech earnings (Apple shares fell 4.3% with the NASDAQ closing down 0.7%), while the US Dollar made up some ground, though more against the Commodity Currency set. The AUD sits back below 0.74 this morning, having been whipped around in the aftermath of yesterday’s CPI and speech from RBA Governor, his big picture reflective piece on the performance of the Australian economy. The statement late in his speech that rate cuts remain on the table hit the wires as he got up to speak and grabbed the market’s attention, but a closer reading revealed a more balanced and less dovish detail, recognising the improved Australian data, thinking aloud whether Australia’s trend growth rate is lower. In any case, the CPI was tight in line with RBA expectations; recent activity data has been better giving the RBA time to remain firmly on hold with the opportunity for re-assessment and reflection.
The decline in Oil prices also grabbed some attention over the past 24 hours, with WTI back below $50/bbl on more than ample supply with US Inventories rising 2.47mb last week with production at 9.56mbpd, a near record. Elsewhere in the commodity space, Iron Ore eased 0.65%, Gold fell 1.0% and LMEX was down 1.42% taking the edge off Commodity Currencies. While the US Dollar was bid, (the Bloomberg spot USD index up 0.3%), it’s been joined in the rate rise “green room” by Sterling, bid into and then supported by yesterday’s BoE Minutes, the Minutes noting that for “a number of members” (up from two in the previous Minutes), that without Greece the rates decision ‘is becoming more finely balanced’. Meanwhile US Existing Home Sales came in better than expected with a 3.2% gain for June
This morning on the economic front we have UK Retail Sales at 9.30 am. This is followed at 1.30 pm by the US Weekly Jobless Claims and the Chicago Fed National Activity Index. At 3.00 PM we have Euro-Zone Consumer Confidence and UK Reported Sales. At the same time the US will release its latest Leading Index. Finally on what promises to be a very busy afternoon after this week’s largely in-active week we have the Kansas City Fed Manufacturing Activity Index at 4.00 pm.
September S&P 500
On what another quiet trading session for US Stocks, I am still long the S&P at 2109 from last Tuesday. I will leave my stop the same at 2102 which came closing to been executed yesterday. If I am stopped out of this position I will still use my ‘5 Handle Rule’ to go long again with a stop below whatever new low is printed. I will still be a small seller on any rally higher to 2121/2126 with a 2131 stop.
EUR/USD
The Euro plan worked well yesterday as shortly after lunch the Euro traded lower to my 1.0880 buy level before having a nice rally into the New York close which enabled me to cover this position at 1.0915 which was sent out in a separate email to my Platinum Members and I am now flat. The Euro has major support at last Monday’s low at 1.0820 and if we can hold this level then I am expecting the Euro to trade higher with a possible move back to 1.14 a strong possibility. Today I will again be a small buyer on any dip lower to 1.0870/1.0900 with a tight 1.0845 stop. I still do not want to be short the Euro at this time.
September Dollar Index
The Dollar had a nice rally shortly after the European Markets opened yesterday morning with the Dollar trading higher to my 97.80 sell level. I am still short and today I will lower my stop on this position to 98.30.
September DAX
No change as I am still a small seller on any rally higher to 11720/11770 with a wider 11820 stop. I will also raise my buy level to 11440/11500 with an 11390 stop. Again given the volatility and unpredictability of the DAX I am only trading in very small size at this time.
September FTSE
The FTSE had a very bad trading session yesterday as it looks more and more likely that the Bank of England may be about to raise Interest Rates and try to normalise Monetary Policy. I am still flat the FTSE as thankfully we had no buy levels again in this market. The FTSE has very strong resistance at 6750 as the market has struggled there every time it has tested this level over the past week. Today I will lower my sell level to 6690/6730 with a tight 6765 stop. With the market rolling over to the downside yesterday I do not want to be long the FTSE at this time.
Dow Rolling Contract
The US Stock market generated another Hindenburg Omen last Tuesday which is the sixth registered Omen since early June. There is no doubt in my opinion that the Dow is on the cusp of a major move lower and that the strong Dollar is having an adverse effect on the earnings of the major Dow stocks. Since we got the agreement with Greece the Dow has continued to underperform both the S&P and the NASDAQ. Today I will lower my sell level slightly to 17950/18010 with an 18050 stop. If I am taken short the Dow and subsequently stopped out of this position I will be a more aggressive seller in front of 18120 with an 18170 stop.
September BUND
No change as my only interest in selling the BUND is still on a rally higher to 153.60/153.90 with a 154.20 stop.
Gold Rolling Contract
My Gold plan worked out well yesterday as shortly after lunch Gold traded lower to my 1088 buy level before having a small rally which enabled me to cover this position for a small gain as I wanted to book some points for yesterday as 1093 and I am now flat. Today I will again be a small buyer on any dip lower to 1080/1089 with a tighter 1071 stop.
Silver Rolling Contract
I am still long Silver at 15.05 on what seems like a market that has stopped trading at this time. I will leave my stop the same at 14.40 which is just below the January spike lower at 14.49. Again if I am stopped out of this trade I will be a more aggressive buyer in front of 14.10 with a 13.60 stop.
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