Yesterday was a day of another of still very contained major FX crosses, while Fed commentary has started to kick in from Jackson Hole. There have been TV interviews with Fed President’s Robert Kaplan (non-voter) and Esther George (voter, and dissenter). Kaplan told CNBC the case for hiking is “strengthening” and we should be able to hike in the “not too distant future”. Kaplan also expressed some caution over China and its debt problems and the potential for that issue to be the catalyst for some market instability. Fed hawk (and dissenter) George said “I do think it is time to move on that rate,” though hedging that with “it doesn’t mean I favour high rates or that raising short-term rates needs to happen rapidly.”
To mark my 1150th issue of Tradernoble 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 135 points yesterday and is now ahead by 1375 points for August having made 1685 points in July. The previous three months saw gains of 2550, 1532 and 2175 points respectively. Since I started this Platinum Service in June 2015 it has averaged a monthly gain of over 2100 points.
Take from those sound bites what you will; even George’s comments embody a degree of caution about the speed and extent of tightening, even though she favours a hike now. There could well be more wire coverage overnight here from interviews. First up, Kansas City Fed President George is scheduled to speak (again), in a meeting at Jackson Hole with the Centre for Popular Democracy’s Fed Up campaign.
Among the key data points released yesterday, the German IFO Business Survey for August disappointed missing on expectations and its current assessment components, the UK CBI retail survey through threw up another positive surprise (as had the industry counterpart earlier this week), the US Durable Goods Orders report for July also surprising on the higher side. Not only did headline orders bounce back 4.4% thanks to higher aircraft orders, but core orders rose 1.6%, hinting at some upside potential for US business fixed equipment investment into this half. Weekly jobless claims remained low at 261K right in line with the average so far this quarter and this year.
Two year US Treasury yields firmed up by around 2-3bps in response, with Fed Fund futures also firming a little for the session. After this week’s data, the Atlanta Fed’s GDPNow estimate for Q3 sits at 3.4%.
This morning on the economic front we have German GIFK Consumer Confidence at 7.00 am and this is followed at 9.30 am by UK GDP. At 1.30 pm we have US GDP and the Trade Balance and this is followed at 2.55 am by the University of Michigan Consumer Sentiment. Finally at 3.00 pm we have the long awaited Yellen speech from Jackson Hole. As for Jackson Hole, while the market understands that the thrust of Fed Chair Yellen’s speech is to address medium term policy and low inflation issues rather than titled to address the outlook for the economy and monetary policy (and thus designed to confirm or have markets reassess Fed funds pricing), there is always the potential for some such coverage and with key press in attendance to get full wire coverage. In my opinion perhaps the most can be expected is that she might indicate each upcoming meeting is “live”, not wanting to be tied down to specific timing (or indeed outcome) given decisions are yet to be made and ahead of key data between now and the September 20-21 FOMC Meeting.
September S&P 500
My S&P plan worked well with the market hitting my 2169 buy level before having a nice rally to 2177. As I had already banked some nice points for yesterday’s trading ahead of getting filled on the S&P I emailed my Platinum Members to cut this position too early at 2171 and I am now flat. I am going to stay flat until we get Yellen’s speech out of the way. If the market subsequently falls I will again look to buy the S&P on any dip lower to 2162/2168 with a 2157 stop. I still do not want to be short the market at this time as I still believe any sell-off will be quickly reversed.
EUR/USD
My long 1.1260 Euro position from yesterday worked well with the market trading as high as 1.1297 and this rally enabled me to cover this position at my 1.1285 T/P level and I am now flat. Just like the S&P above I will stay flat until we get the Yellen speech out of the way. If the Euro sells off after she speaks I will again look to buy the market on any dip lower to 1.1200/1.1240 with a 1.1160 wider stop. I still do not want to be short the Euro at this time.
September Dollar Index
No change as I am still a seller on any rally higher to 95.20/95.50 with the same 95.80 stop.
September DAX
My DAX plan worked well as after the IFO was released the DAX traded lower to my 10490 buy level with a 10465 low print before having a nice rally which enabled me to cover this position at my 10550 T/P level and I am now flat. Today I will again look to buy the DAX on any dip lower to 10390/10450 with a 10340 stop. Just like the other main Indices I still do not want to be short the DAX at this time.
September FTSE
My FTSE plan also worked well as shortly after the European Markets opened the FTSE traded lower to my 6780 buy level before having a nice rally to 6828 which enabled me to cover this position at my 6810 T/P level and I am now flat. Today I will again look to buy the FTSE on any dip lower to 6745/6775 with a 6720 stop. I still do not want to be short the market at this time.
Dow Rolling Contract
Unfortunately the Dow just missed my 18425 buy level with an 18429 low print before having a nice rally into the close and I am still flat. Today I will again look to buy the Dow on any dip lower to 18350/18410 with an 18295 stop.
September BUND
Unfortunately I lowered my buy level in a separate email to my Platinum Members to 166.80/167.10 and I am still flat. If you did by the Bund I would use any rally to close this position ahead of the Yellen speech this afternoon. If the Bund subsequently dips after she speaks I will again look to buy the Bund on any dip lower to 166.60/166.95 with a 166.25 stop. I still do not want to be short the Bund at this time.
Gold Rolling Contract
No change as I am still a buyer on any dip lower to 1305/1312 with the same 1298 stop. Apparently the Venezuelan Government has been the main seller over the past number of weeks due to the economic situation worsening at a worrying rate and they need to sell Gold to use the funds to keep the county going.
Silver Rolling Contract
No change as I am still long from earlier this week at 18.60 with the same 17.95 stop. Remember Silver has strong support from 18.20/18.50 and initially I would expect Silver to at least rally after testing this key support level.
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