European and U.S markets on Friday failed to key off the 4.82% rise in the Shanghai Composite, in contrast to Thursday. The proximity to the weekend Jackson Hole talkfest looks to have been a factor keeping trading subdued, as too an interview broadcast by CNBC with Fed Vice Chairman Stan Fisher during the day that neither ruled in nor out the possibility of raising rates in September. Both the S&P 500 and Dow finished about flat, and meaning that on the week the S&P was +0.91% but month to date – 5.46%. In FX the dollar continues its recovery, DXY +0.52% but the broader BBDXY up just 0.17%. AUD bucked the firmer USD trend, adding 0.1% to 0.7173. In rates market, US 2yr Treasuries ended the NY session +2.8bps at 0.7156 (so up 10bps on the week and just about fully reversing the prior week’s drop). 10s were -0.4bp at 2.18% (compared to Monday’s intra-week low of 1.96%).
For anybody following my new Platinum Service it made 300 points on Friday and is now ahead by 1925 points for August.
I have been asked to do a live trading/training day over the Non-farm Payrolls this coming Friday September 4th in the Royal Irish Yacht Club Dun laoghaire from 11.00 am to 5.00 pm. ETX Capital have kindly agreed to sponsor any existing or new clients account’s to the tune of EUR150 for everyone who attends this event. If anybody is interested please contact Graham on grahammulhern@yahoo.com
In commodities, Gold added $8.60 to $1133.6. The LMEX index added 1.03% and Iron ore $2.11 to $56.04. August to date, Iron ore is +$2.59. Oil rallied by upwards of $2.50. The July US core PCE deflator rose by just 0.07%, so +0.1% rounded, reducing the y/y rise to 1.2% from 1.3%, its lowest level of the year. So another argument if needed for delaying Fed lift-off beyond September. Personal Income rose by 0.4% as expected and Personal Consumption expenditure by 0.3%, below the 0.4% expected. The final University of Michigan August Consumer Sentiment index fell a point to 91.9 from the 92.9 preliminary and below the 93.0 expected.
CFTC/IMM data for the week ended Tuesday 25 August shows a sharp reduction in net speculative shorts in JPY and EUR but an extension of the already short base in AUD – data that goes a long way in rationalising recent FX price action. Overall USD longs vs. G10 currencies reduced to 244k from 367.1k. EUR net shorts were pared to 66.1k from 92.7k (almost half what it was two weeks ago). JPY shorts came in to just 39.1k from 90.1k and the recent high of 105.2k two weeks ago, so down by almost two thirds. AUD net shorts blew out to 63.7k from 49.9k, the largest since the week ended 10 March and now extreme. This is one reason to be cautious about extrapolating the recent weaker AUD trend, short term at least.
Fed Vice Chairman Fischer was interviewed by CNBC’s Steve Liesman in Jackson Hole on Friday (while markets were still open). He said he wouldn’t want to decide now on the lift-off case. He said the previous case for September lift-off was pretty strong but that the Fed doesn’t have to move immediately. His says confidence in inflation moving up was ‘pretty high’. On Saturday, Fischer said “I do not plan to upset your rational expectation that I cannot tell you what decision the Fed will reach by 17 September”.
This morning the European markets are opening sharply lower on the back of lower Chinese and Japanese shares which are both trading on their session lows as I write this commentary. With London closed today for the UK Bank Holiday, liquidity may be a problem.
This morning on the economic front we already had the release of German Retail Sales which came in better than expected at +1.4% versus 1.0% expected. At 10.00 am we have Euro-Zone CPI. Finally at 2.45 pm we have the only US data release today namely the Chicago Purchasing Manager’s Survey.
September S&P 500
The S&P plan worked very well on Friday as shortly after the US markets opened the S&P rallied to my 1987 sell level with a 1990 high before having a nice sell-off which enabled me to cover this position at my 1978 take profit level as outlined earlier to my Platinum Members and I am now flat. This morning the S&P is trading 17 Handles below where we closed on Friday and I would expect some of the ‘Open Gap’ to be filled when the US markets open later. For this reason I will be a small buyer from 1962/1968 with a 1957 stop. My only interest in selling this market especially given the fact that today is month-end is on a rally higher to 1989/1996 with a 2002 stop.
EUR/USD
On Friday afternoon the Euro got hit again with the market eventually trading lower to my 1.1205 average buy level. I have now covered this position this morning at 1.1240 as outlined in a separate email to all my Platinum Members and I am now flat. Today I will again look to buy the Euro on any dip lower to 1.1150/1.1190 with a 1.1125 stop. Despite the negative price action I do not want to be short the Euro at this time.
September Dollar Index
My short 95.90 position from last Thursday worked well as shortly after I posted on Friday the Dollar traded lower to my T/P level at 95.45 as again outlined earlier to my Platinum Members and I am now flat. Today I will again look to go short on any rally higher to 96.25/96.60 with a 96.90 stop.
September DAX
I am still flat the DAX and today given how bullish the DAX has been trading over the past two trading sessions I will be a small buyer on any dip lower to 10080/10130 with a 10030 stop. I do not want to be short the DAX at this time.
September FTSE
My short 6185 FTSE position from last Thursday also worked well on Friday as the market had a nice sell-off shortly after I posted which enabled me to cover this position at my 6145 T/P level and I am now flat. With the UK markets all closed for their Bank Holiday I am going to stay flat today.
Dow Rolling Contract
It took a long time but finally just before the close last Friday Evening the Dow rallied higher to my 16680 sell level. Thankfully the Dow opened lower last night which enabled me to cover this position at my 16590 T/P level as outlined to my Platinum Members and I am now flat. The volatility in the Dow over the past few weeks has been incredible and is now giving the DAX a run for its money. Today I will again look to go short on any rally higher to 16650/16720 with a 16770 stop. Given the large ‘open Gap’ lower this morning I will also be a small buyer on any further dip to 16420/16480 with a 16370 stop.
September BUND
The BUND also traded lower to my 153.55 buy level late on Friday. I am still long and today I will raise my stop on this position to 153.45. If I am stopped out of this trade I will be a more aggressive buyer from 152.80/153.10 with a 152.55 stop.
Gold Rolling Contract
No change as I am still a small buyer on any dip lower to 1115/1123 with the same 1108 stop.
Silver Rolling Contract
No change as I am still a small buyer on any dip lower to 14.00/14.30 with the same 13.80 stop.
Recent Comments