As Central Banks in both New Zealand and Australia resist the pressure for still lower Interest Rates in part in evidence that both of their respective housing markets are in rude health that further easing risks usurping the success of macro-prudential to date to keep price rises in check, we are now seeing signs in other parts of the world of rebellion by private sector banks aimed at circumventing the deleterious effects of negative Central Bank policy rates and Government Bond Yields.
To mark my 1100th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2500 for my Platinum Service 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 25 points yesterday and is now ahead by 412 points for June. The previous three months saw gains of 1532, 2175 and 2265 points respectively. Since I started this service over 12 months ago it has averaged a monthly gain of 2200 points.
Yesterday in Japan, BTMUFJ indicated it was minded to withdraw from being a Primary Dealer in JGBs. Though not yet confirmed, this would represent a protest against the inability to profit from taking JGBs on their balance sheet at negative interest rates while at the same time having to pay the BoJ for the privilege of depositing excess reserves with them. In Germany meanwhile, Commerzbank has revealed that it is considering acquiring a stash of safe deposit boxes with the intention of holding a portion of its excess reserves in bank notes rather than negative yielding deposits with the Bundesbank. Stay long security firms.
The past 24 hours has not seen a whole lot of volatility. US Treasuries have spent most of the day trading in a 2bp range, while US equities continue to draw comfort from the fact that the Fed are probably on hold to at least September, but if we remember price action in the run up to last Friday’s NFP Report, we could also argue that US risk markets were in any event travelling without much fear of a July tightening given the apparent strength of the US economy.
In currencies, the US Dollar is softer for the fourth consecutive trading session with the Euro now trading at 1.14 having been as low as 1.1140 ahead of the NFP Report. The weak Dollar has in turn helped commodity prices with both Gold and Silver having nice higher closes yesterday. Brent closed $1.27 higher at $52.71 which is its highest close since November 2015.
The US Dollar weakened yesterday despite a fairly strong US JOLTS Opening Report.
This morning on the economic front we already had the release of the German Trade Balance which printed higher than expected. We have UK Trade Balance at 9.30 am. ECB President Dragi is speaking in Brussels later this morning and it will be interesting to see if he says anything to push the Euro lower. At 1.30 pm we have the US Weekly Jobless Claims. Finally at 3.00 pm we Wholesale Inventories.
June S&P 500
The S&P traded in a very narrow range on low volume. The market just missed my 2120 sell level with a 2119.50 high print before having a small sell-off and I am still flat. It is still very difficult to be short the market especially ahead of the FOMC next Wednesday and the June Quarterly Expiration tomorrow week. Today I will now raise my buy level to 2102/2108 with a 2097 stop. My only interest in selling the market is on a rally higher to 2124/2130 with a 2135 stop which is just above the all -time high made last year. With no yield of any description anywhere in the developed world fund managers are been forced to buy the market and this will continue until the charts tell us the game is over or we get a ‘Black Swan’ event.
EUR/USD
I am still flat the Euro which is testing the top of its Daily Bollinger Band after its 300 post NFP rally. Today I will raise my buy level slightly to 1.1320/1.1350 with a wider 1.1275 stop. With Dragi speaking later this morning I hope he will talk down the Euro first but the price action still tells me to buy the Euro on dips. Despite the Euro been overbought I do not want to sell the market at this time.
June Dollar Index
I am still flat the Dollar and I will now lower my sell level slightly to 94.20/94.50 with a 94.80 stop. I will leave my buy level unchanged at 92.10/92.50 with a 91.75 stop which is just below its 91.80 low print from early May.
June DAX
The DAX again missed my sell level as the market trades heavy on the back of the stronger Euro. Today I will be a small buyer on any dip lower to 10040/10100 with a 9990 stop. My only interest in selling the market is still on a rally higher to 10340/10390 with a 10440 stop but only in small size.
June FTSE
My long 6255 FTSE position taken early yesterday morning worked out with the market hitting my 6280 T/P level as emailed to my Platinum Members and I am now flat. Today I will again look to buy the FTSE on any dip lower to 6215/6245 with a 6175 stop. With Sterling continuing to trade weak ahead of the referendum on June 23 I do not want to be short the market at this time.
Dow Rolling Contract
No change as I am still a seller on any rally higher to 18070/18130 with a 18180 stop. Given how over extended the Dow is trading I do not want to be long the Dow at this time preferring instead to buy the S&P on any dip.
June BUND
I tried to be to clever with my Bund plan yesterday as having gone short at a nice level at 165.45 I covered this position at 165.35 expecting the Bund to trade in negative territory first before trading lower. Unfortunately this did not happen and the Bund got slammed and I am still flat. Today I will look to buy the Bund on any further dip lower to 163.75/164.05 with a 163.55 tight stop. I will also move my sell level lower to 165.20/165.50 with a 165.70 stop which is just above yesterday morning’s 165.65 high print and new all-time high.
Gold Rolling Contract
I do not want to chase this market higher and today I will leave my buy level unchanged at 1237/1244 with a 1229 tight stop.
Silver Rolling Contract
Silver has now rallied over 8% since its pre NFP low last Friday. Having covered my last long position at 16.60 yesterday morning I am still flat. Today I will raise my buy level to 16.60/16.90 with a 16.25 stop. If Silver can break and close over 18.10 it will be a new break-out to the upside and opens up a potential mover to at least $21/$23 over the coming months.
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