Friday looks to have shown FX traders to be the smartest guys in the room. Traditionally referred to as the ‘last market to clear’ (and so giving FX analysts such as this scribe a career) the US Dollar had put on a strong showing during the APAC session. The late NY day comments from San Francisco Fed President John Williams, claiming a September Fed hike should definitely be in play and that the view the Fed is on hold for the next year is not consistent with the economic outlook, were ostensibly the catalyst. Yet the US rates market hardly moved during the Asia session.
For any of my UK members who may be interested I am doing a special all-day trading seminar over the Non-Farm Payrolls in London on September 2nd 2016. I will be assisted by Paul Wallace who is a trader that I have done a lot of joint presentations in both Dublin and London over the past 12 months. Paul is a very engaging and interesting speaker and together we will try and take you through how to trade markets live over an important economic indicator. If anyone is interested in this not to be missed event in my opinion you can check the details out on the following link:
https://summer2016londonlivetradingday.eventbrite.com
For anyone following my Platinum Service it made 79 points on Friday and is now ahead by 900 points for August having made 1682 points in July. The previous three months saw gains off 2550, 1532 and 2175 points respectively. Since I started my Platinum Service in June 2015 it has averaged a monthly gain of over 2100 points.
Fast forward to the New York day, and US Bond Yields climbed steadily higher through the session, to end as much as 5.5bps higher. The US Dollar meanwhile gave back a little of its earlier gains in NY pm trade. There was no new news of note during offshore trading hours, the northern hemisphere summer and re-runs of Usain Bolt’s latest Rio victories and celebrations providing more than enough distraction from market matters.
This morning, we come in to a particularly upbeat speech delivered yesterday by Fed vice-chairman Stanley Fischer, saying core inflation was within ‘hailing distance’ of the 2% target while Employment had increased ‘impressively’ since its nadir in 2010. This should resonate in APAC markets. US stocks closed Friday modestly lower alongside higher rates, the S&P500 -0.14% to 2183.9. Dow -0.24% and the NASDAQ -0.03%. Despite which, the VIX ended slightly lower, 11.34 from 11.43.
In rates, 2-year Treasuries closed +4.5bps at 0.748% and 10s +4.3bps at. Earlier Bunds added 5bps to -0.032%.
Meanwhile in FX, thee narrow DXY index ended NY 0.38% higher at 94.5 and the broader BBDXY +0.44%. The big dollar was higher against every G10 currency and pretty much the entire EM spectrum (e.g. ADXY -0.52%). The NOK was the biggest loser (having been the biggest winner in the previous week or so), -0.83% and followed by the AUD. The latter flirted briefly with a 0.75 handle in Europe (low of 0.7599) before recovering to close in NY -0.77% at 0.7627. It’s back to 0.76 at Monday’s re-open. USD/CAD was among the biggest gainers Friday, +0.7% to 1.2871 with some impetus from very weak June Retail Sales data (-0.8% ex-autos against +0.3% expected) and which could mean a negative Q2 GDP outcome.
Commodities saw gold lose $11 to $1340 while oil was mixed, WTI +$0.2 to $48.57 and Brent -$0.1 to $50.79 (+3.82 on the week). Iron ore firmed by $.20 to $60.95.
Today is one of the quietest economic releases that I can remember in a long time with no European or UK Data due today. This afternoon in the only US release we have the Chicago Fed National Activity Index at 1.30 pm.
September S&P 500
My S&P plan worked well with the market hitting my 2177 buy level with a 2172.50 low print before having a nice rally to 2185 which enabled me to cover this position at my 2180.50 T/P level and I am now flat. To confirm how low the VIX is trading, the last three weekly S&P closes are all within an incredibly tight 1 ½ points range. I cannot ever remember this fact happening before. This is reflecting inertia in market action. Again and despite the main three US Indices closing near record all-time highs the McClellan Oscillator weakened on Friday closing with a negative -58 print. This confirms that internally this market is weak and nervous but again until we get a see-extreme that sticks for more than a few days it is still difficult to be short. Today I will again look to buy the S&P on any dip lower to 2170/2176 with a 2165 stop. I still do not want to be short the market at this time.
EUR/USD
My Euro plan worked well on Friday with the market hitting my 1.1305 buy level before having a 30 point rally which enabled me to cover this position at my 1.1329 T/P level and I am now flat. Over the last couple of days the Euro has stopped at a nine month trend line at 1.1350/1.1355. If the Euro can break and close over this level, before subsequently breaking the key 1.1440 pivot point then the Euro could well accelerate to the 1.22 level that I mentioned last week. I still do not want to be short the Euro at this time and today I will again look to buy the Euro on any dip lower to 1.1250/1.1280 with a 1.1215 stop.
September Dollar Index
No change as I am still a seller on any rally higher to 95.30/95.60 with a 96.05 stop.
September DAX
My DAX plan also worked well on Friday with the market hitting my average buy level at 10510 before having a nice rally to 10600 which enabled me to cover this position at my revised 10550 T/P level as emailed earlier to my Platinum Members and I am now flat. Today I will again look to buy the DAX on any dip lower to 10420/10485 with a 10380 stop. I still do not want to be short the DAX at this time.
September FTSE
No change as I am still a small buyer on any dip lower to 6795/6825 with a 6765 stop. Remember the FTSE should have decent support at the 6770/6800 level and initially I would expect the market to rally off any test of this level. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
The Dow also hit my 18520 buy level on Friday before rallying. As I had so many open position’s at the time I emailed my Platinum Members to cut this position at 18545 and I am now flat. Today I will again look to buy the Dow on any dip lower to 18420/18480 with an 18365 stop. Just like the other stock Indices, until we sell a sell extreme I do not want to be short the Dow at this time.
September BUND
The BUND got hit hard on Friday and in the process hit my average buy level at 167.05. The market made a low at 166.73 before rallying back to my entry level near the close. Today I will raise my stop on this position to 166.60. If I am stopped out of this trade I will be a more aggressive buyer in front of 166.00 with a tight 165.70 stop.
Gold Rolling Contract
No change as I am still flat Gold which this morning is trying to follow Silver lower. Today I will again look to buy the market on any dip lower to 1311/1319 with a 1305 stop. Remember a break and close below 1310 will see Gold accelerate lower.
Silver Rolling Contract
My long 19.85 Silver position was eventually stopped out shortly after lunch on Friday at 19.40. Thankfully I had no second level to buy Silver especially as the market is getting hit hard this morning on the break of the previous key support at 19.20. The next major support is from 18.20/18.60 and today I will be a buyer in this area with a 17.75 stop.
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