The past 24 hours has seen the US Dollar pretty much fall against all currencies. A more dovish than expected Fed has triggered a drastic US Dollar repricing with the Fed broad US Dollar Index loosing over 1% yesterday for its biggest one day drop in almost 4 years, Baring some exotic currencies, the US Dollar is only stronger against the Argentine Peso. In G10 currencies, the NZD is again at the top of the leader board closing up 2% against the USD, boosted by yesterday’s stronger than expected Q4 GDP figures. Of the majors, Sterling has performed relatively well, as the BoE left its policy unchanged at 0.5%, but the Minutes dampened speculation that its next move is likely to be a cut.
To mark my 1000th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2500 for my Platinum Daily Commentary which includes 1/4 updated emails throughout the trading day. This offer is open to both new and existing members and if anyone is interested please email me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it made 270 points yesterday and is now ahead by 1785 points for March having made 2265 points in February and a record 3365 points in January. Since I started this service last June it has made over 21,500 points.
Looking at equity markets, it is interesting to note the contrasting performance between the US, Europe and Japan. The surprisingly dovish Fed has provided a boost to US equity stocks. US equity gains have been led by Industrial shares with the Dow closing 0.9% higher on the day and amazingly back in positive territory for the year. In contrast shares of European exporters weighed on the Stoxx Europe 600 Index (down 0.3%) as the Euro gained 1% against the USD. Similarly, the Nikkei ended yesterday 0.2% lower and that trend has continued this morning with another 1.25% fall to 16,700 with exporters also the underperformers with the strength of the Yen which is now trading at 111 versus the USD. The Yen was stronger but talk of the BoJ checking rates saw a quick big figure move in USD/JPY. However Abenomics and the BoJ strategy to reflate the Japanese economy are now looking even harder following the strengthening in the Yen and fall in the Nikkei.
The drop in the USD over the past 24 hours has effectively triggered a repricing in commodities. WTI oil is back above the $40 mark for the first time since December 4 last.
In other news, Norway’s Central Bank cut its main interest rate by 25bps to 0.5% in order to boost its oil dependent economy. Looking ahead, however the Bank noted that it needed to tread carefully from here as the effects of taking rates closer to or below zero remained unclear. Meanwhile the SNB (Swiss National Bank) maintained its policy rate and the non – committal accompanying statement offered no hints of further easing.
US economic data was mostly better than expected, but did little to stem the fall in the USD.
This morning on the economic front we already had the release of German PPI which came in very weak at -0.5% versus -0.1% expected. At 10.00 am we have Euro-Zone Labour Costs. The only US data of note is the University of Michigan Consumer Sentiment and this important release will be at 2.00 pm. Meanwhile the Fed’s Dudley, Rosengren and Bullard are all speaking at differnet conferences this afternoon.
June S&P 500
My short 2026 S&P worked really well as just after I posted the S&P followed the DAX lower which enabled me to cover this position at my 2015 T/P level. Shortly after covering this position the S&P traded lower to my 2007 revised buy level as indicated to my Platinum Members before incredibly rallying in the afternoon to a 2036.75 high print. As all my Indices got hit close together I covered this position too early at 2013 as I wanted to reduce my risk exposure and I am now flat. Today is one of the most difficult trading days of the year due to the Quarterly Expiration of the March Futures and Options Contracts. While the March Contract will expire shortly after the Chicago opening the Options do not expire until just before the Chicago close at 8.00 pm. Today I will raise my sell level slightly to 2038/2045 with a wider 2052 stop as I still look for the S&P to at least initially have difficulty in breaking the key 2035/2050 resistance level. My only interest today in buying the market is on a dip lower to 2010/2017 with a 2004 stop which is just below yesterday’s low print.
EUR/USD
I was very unlucky with my Euro call yesterday as twice the Euro missed my 1.1345 sell level by 2 pips and again overnight by 8 pips when the market traded higher to 1.1337. This morning the Euro is opening lower due mainly to comments from ECB’s Chief Economist Praet who said the ECB may cut the Deposit Rate further if needed as yet again no Central Bank wants a strong currency in this deflationary environment. Dragi must be livid to the reaction of the Euro when we were trading at 1.0825 after he announced his latest policy cut just last week only to see the Euro trading 500 points higher. Today I will still look to sell the Euro on any rally higher to 1.1340/1.1370 especially with the Euro trading at the top of the Williams Index and outside the top of its Bollinger Band. I will also leave my buy level unchanged at 1.1180/1.1220 with the same 1.1145 stop.
June Dollar Index
No change as I am still a seller on any rally back to 95.70/96.00 with the same 96.30 stop. As I mentioned yesterday, despite the Dollar been oversold I do not want to be long at this time especially following its second downside Key Day Reversal in less than a week.
June DAX
It is incredible to think that while the Dow made a new high for 2016 that the DAX had a downside Key Day Reversal yesterday as the strong Euro took its toll. The DAX was in freefall just before I posted my Platinum Service which enabled me to lower my buy level to 9810 before the market rallied and this enabled me to cover this position at my 9860 T/P level and I am now flat. The comments above from Praet may support the DAX today and for this reason I will again look to buy the DAX on any dip lower to 9820/9860 with a 9770 stop. Given the significance of yesterday’s downside Key Day Reversal I will now lower my sell level to 10080/10140 with a 10210 stop.
June FTSE
My FTSE plan also worked well as shortly after I posted the FTSE traded lower to my 6070 buy level before having a subsequent rally to 6153 which enabled me to cover this position at my 6100 T/P level and I am now flat. Today I will again look to buy the FTSE on any dip lower to 6070/6100 with a tight 6045 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
When I wrote my commentary yesterday I never expected both my buy and sell levels to get hit especially when both levels were so far apart but there is no doubt the weaker Dollar is definitely giving a boost the the Dow which is now trading over 2000 points higher than its low made just 5 weeks ago. Yesterday after I posted the Dow followed the DAX lower which enabled me to buy the market at 17250 before unfortunately covering this position way too early at my 17300 T/P level. Subsequently the Dow rallied higher to 17500 sell level. I am still short and not comfortable with this position but I do expect the US markets to fall once this Expiration is out of the way today plus the McClellan Oscillator closed yesterday with a very high reading of +194. As we are having a good week on top of an excellent month I will now raise my stop on this position to 17580. Given how overbought the Dow is trading I do not want to be long the market at this time.
June BUND
The BUND has again opened higher this morning and I have now gone short at the top of my sell range at 162.65 with the same tight 162.85 stop. If I am stopped out of this position I will be a more aggressive seller in front of 163.10 with a 163.50 stop which is juts above the post – ECB rate announcement last week.
Gold Rolling Contract
No change as I am still a buyer on any dip lower to 1239/1247 with the same 1233 tight stop.
Silver Rolling Contract
Having cut my long Silver position on Wednesday at 15.48 and the fact the Silver is back trading above 16.00 this morning with a 16.17 high print I have just bought Silver again here at 16.00 with a 15.35 stop.
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