Interest yesterday in what the BoE Governor had to say after their latest meeting and how “hawkish” he might be, focus of course also in their forecasts in the latest Quarterly Inflation Report. Was it more or less likely they would get over the line with lift-off before the Fed? Not if yesterday’s meeting was an indication. The Committee voted 8-1 to keep rates unchanged, more dovish than the consensus tipping 7-2 and several analysts expecting 6-3. Couple that barely split vote with comments from Governor Carney noting that the Old Lady was looking at the impact of Sterling on inflation and it was the catalyst that took threw a dose of cold water on rate lift-of expectations and sterling.
For anybody following my New Platinum Service it made 150 points yesterday and is ahead by 250 points for the week. Last Month it made 1810 points while June showed a positive return of 3045 points. If anybody is interested in this new service please email me on bryan@tradernoble.com for details.
Two year gilts eased 4.3 bps to 0.607% while sterling dropped a big figure from over 1.56 to below 1.55 before steadying just above 1.55. Sterling under-performed in a day when large currency moves were noticeably absent, losing some grip in the wake if the BOE announcement on “Super Thursday”, the Bank releasing the voting, the Minutes and the Inflation report. Sterling is still 6% higher in trade-weighted terms so far this year.
There was no compelling data out of the US, Weekly Jobless Claims almost bang on last week’s and expectations for little change ahead of Payrolls later today. We did see though evidence that the weaker Euro looks to be supporting European industry, Germany factory orders up a perky 2.0%/7.2% in June, supported by non-Eurozone orders. The AUD has been trading within its recent ranges, aside from the immediate confusion after yesterday’s twin spike in employment and the unemployment rate, confusing interpretation and initial market reaction. The Dow had another bad day loosing another 120 points to close 0.7% lower, while Oil fell 0.8 % and is now below $45 per barrel.
This morning on the economic front we have German Industrial Production and Current Account Balance at the earlier time of 7.00 am. This is followed at 9.30 am by the UK Trade Balance. At 1.30 pm we have the latest US Non-Farm Payrolls where the consensus is for a rise of 225K versus last Month’s 223K rise. The Unemployment Rate is expected to remain unchanged at 5.3%. Finally at 8.00 pm we have US Consumer Credit.
September S&P 500
Yesterday was a very frustrating trading session for me in the S&P as the market just missed my 2100 sell level by 0.7 of a Handle before having a nasty 29 Handle sell-off on what can only be described as a very weak trading session for the US Stock market. Thankfully we had no buy levels in any of my calls over the last few days as to me it is only a matter of time before we take out the key 2035/2040 major support level. There is no doubt the US Economy is slowing and having spent the best part off and on over the past three months in the US I can testify to this conclusion. The property market is slowing down with the banks having very little appetite to lend into a slowing economy. Most of the jobs been created are low paying and today I will especially be looking at the average earnings component of the Non-Farm Payroll number at 1.30 pm. As usual with this key data I will remain flat until we get the release and if the market rallies to 2086/2091 on this release I will be a small seller with a wider 2101 stop which is just above yesterday’s high. I still do not want to be long the S&P at this time as the risk is all to the downside in my opinion.
EUR/USD
My Euro plan worked well yesterday as shortly after the US Markets opened the Euro traded lower to my 1.0885 buy level before having a nice rally which enabled me to cover this position at 1.0930 as outlined earlier to my Platinum Members and I am now flat. Today I will again look to buy any dip to 1.0830/1.0870 with a wider 1.0790 stop.
September Dollar Index
My short 98.10 Dollar position worked well yesterday as the market had a nice sell-off after the European Markets opened which enabled me to cover this position at my 97.75 take profit level and I am now flat. Today my only interest in selling the Dollar is still on a rally higher to 98.45/98.75 with a 99.05 stop.
September DAX
To me the DAX is the most difficult market to trade at this time. With the weak Euro the DAX does not want to trade lower. Despite the positive price action in the DAX I cannot bring myself to buy this market and I am going to stand aside again today and take another look on Monday as I do not see any good risk/reward trade at these levels.
September FTSE
My short 6700 FTSE position worked well yesterday as shortly after I posted the FTSE traded lower to my take profit level at 6660 as outlined to my Platinum Members and I am now flat. Today my only interest in selling the FTSE is on a rally higher to 6730/6760 with a tight 6780 stop. I still do not want to be long the FTSE at this time.
Dow Rolling Contract
The Dow had another bad trading session yesterday with this market trading over 800 points lower since its recent high in mid-May. The Dow has strong support from 17330/17400 and a break and close below here will be very bearish. As I have been mentioning over the past few weeks the strong Dollar is having a huge effect on the earnings for the major Dow stocks. Now with Apple shares declining this is really having an effect on the Dow. Today I will stay flat until we get the Payroll Report released and if the Dow rallies on this data I will look to go short in small size from 17550/17600 with a 17650 stop.
September BUND
Unfortunately the BUND just missed my 152.80 buy level before having a nice rally yesterday and I am still flat. Today I will raise my buy level slightly to 152.90/153.30 with a 152.50 stop.
Gold Rolling Contract
Gold is trying to bounce but so far with little success. I am still flat Gold and today I will raise my buy level slightly to 1070/1078 with a 1063 stop.
Silver Rolling Contract
My long 14.45 Silver position finally worked out yesterday as the market had a nice rally after the US stocks started to fall which enabled me to cover this position at 14.75 as outlined earlier to my Platinum Members and I am now flat. Today I will again look to buy Silver on any dip lower to 14.20/14.50 with a 13.90 stop.
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