Just as I posted yesterday morning China received the official nod from the IMF for inclusion in the SDR as entirely expected, the AUD sits back above 0.72 this morning, notwithstanding another move lower in Chinese Iron ore spot prices overnight. And Cyber Monday US internet retail sales at the end of the Thanksgiving Day holiday weekend, has seemingly topped off better web-sales growth than last year (26% Sat/Sunday; 18% Monday cf 17%/Monday 8.5% last year). Finally, on the data front, German November CPI was right in line with expectations and the US had mixed – and again volatile – Regional Manufacturing Reports ahead of the national ISM this afternoon. India reported its Q3 growth at 7.4%, a point more than the 7.3% expected and up from 7.0% in Q2.
For anybody following my New Platinum Service it made 129 points yesterday to close November with a 1510 point gain. The previous five months saw gains of 1600, 2833, 2195, 1810 and 3045 points respectively. If anybody is interested in my Platinum Service please email me on bryan@tradernoble.com for details.
The IMF Board agreed to include the RMB in the its Special Drawing Rights (SDR) currency basket from 1 October 2016, recognising that the RMB is “freely usable” for international payments and China’s importance in global exports. The weight for the RMB was set at 10.9%, compared with 42.97 for the USD and 30.93% for the EUR. The JPY will be 8.33% and GBP 8.09%. No immediate practical implications; for 2016, there may well be an expectation of RMB weakness next year with EM weakness and AUD also then vulnerable.
For yesterday’s FX moves, the broad rally in high-yielding currencies seems to have been sparked by a sharp gain in the CNH after the CNH-CNY spread blew past 600pts on Friday and early yesterday morning, the AUD making headway through the session overnight, despite another decline in iron ore.
In the US the Chicago PMI for November released yesterday afternoon was a shocker coming in at 48.7 versus 56.3 for October and an expected print of 54. However yet again the markets have chosen to ignore bad data in the expectation that the Fed may hold off raising Interest Rates later this month. This makes Friday’s Non-Farm Payrolls even more important.
Markets are opening better this morning with the Nikkei closing up over 1.3% to sit comfortably above the key 20,000 resistance level. The Bank of England have just announced that all seven major UK Banks have passed the latest stress tests.
This morning on the economic front we have German Unemployment and PMI at 8.55 am. This is followed at 9.00 am by Euro-Zone Manufacturing PMI. At 9.30 am we have UK Manufacturing PMI. The Euro-Zone will release its latest Unemployment Report at 10.00 am. The big release in the US this afternoon at 3.00 pm is the ISM Manufacturing Index for November, printing at a just – growing 50.1 in October market expecting a small acceleration to 50.5 with particular focus on the Employment component ahead of Payrolls on Friday.
Finally at 5.45 pm the Chicago Fed President Charles Evans will speak on Monetary Policy and the Economy. Remember Evans is one of the only Fed Members who has been consistent with his views on Inflation where he says that we will not see 2% inflation until at least 2022. His speech today will be worth watching and could have a big impact on the markets.
December S&P 500
It took a while but finally my S&P plan worked well yesterday as very late in the US trading session the S&P traded lower to my 2080 buy level before having a nice rally into the close which enabled me to T/P on this position at 2085.2 as indicated earlier to my Platinum Members and I am now flat. Given the importance of this week it is very hard to be short the markets especially with the expected rate cut from the ECB on Thursday and then the significance of Friday’s NFP data. With today being the start of a new month where the major pension funds tend to put monies to work I still do not want to be short the market at this time. I will again look to buy the S&P on any dip lower to 2077/2082 with a 2072 stop.
EUR/USD
Unfortunately the Euro just missed my 1.0555 buy level by three pints yesterday and I am still flat. Today I will raise my buy level slightly to 1.0530/1.0560 with a 1.0490 stop which is just below the April low at 1.0493. I still do not want to be short the Euro at this time.
December Dollar Index
I am still short the Dollar at 100.20 from last Friday. I will leave my stop unchanged at 100.50 on this position. Remember a break and close over 100.39 which is the 2015 high from last April will be at least short-term positive.
December DAX
When I was writing my commentary it looked like the DAX would hit my 11220 buy level but that all changed with the news from China which sent the DAX nearly 200 points higher. Thankfully we have not being short the DAX apart from one day last week over the previous three weeks as every dip continues to be bought. This trend will continue onto Thursday and then we will see if the ECB are going to follow through with their promises of another rate cut. Today I will raise my buy level to 11250/11310 with a 11210 stop. The next major resistance for the DAX is not until the 11800 area so there is still plenty of scope for this market to rally further.
December FTSE
The UK stock market is getting support this morning from the fact that all seven major UK Banks have passed the latest stress tests. Shortly after this announcement the FTSE traded higher to my 6410 sell level. As I am not comfortable in being short this morning I have just covered this position here at 6395 and gone flat. The FTSE has major resistance at the 6450 level and we could well test this level over the coming hours. For this reason I will raise my sell level to 6435/6465 with a tight 6480 stop.
Dow Rolling Contract
Unfortunately the Dow just missed my 17895 sell level with a 17870 high print before having a nice 100 sell-off and I am still flat. Today given that it is the start of a new month I will raise my sell level to 17910/17960 with a 18015 stop. Despite the positive price action I do not want to be long the Dow at this time.
December BUND
It is very frustrating when you get the direction right only to have got stopped out of my latest short position near the highs of the day at 158.70 last Friday when you see the market trading back below 158 this morning. I am still convinced that the BUND is close or very near a major top as the idea on buying a 10 year Bond which yields less that 40 bps is insane. The fact that trillions of European Bond are trading with a negative interest rate is even more insane. This Bond party will not end well in my opinion. Today I will lower my sell level to 158.35/158.65 with a 158.85 stop which is just above last Friday’s high print.
Gold Rolling Contract
The big question is have we seen the low for 2015 for Gold with last Friday’s and yesterday’s low print at 1053 before Gold had nice $20 rally which enabled me to cover my long 1058 position at my 1064.2 T/P level as outlined earlier to my Platinum Members and I am now flat. Today I will again look to buy Gold on any dip lower to 1059/1065 with a 1049 stop.
Silver Rolling Contract
No change as I am still long at 14.03 with the same 13.65 stop.
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