After I posted my Daily Commentary yesterday morning, there was a pretty keen anticipation of a forthcoming Bloomberg TV interview with Fed Vice-Chair Stanley Fischer, after his suggestion to rival business TV broadcaster CNBC at Jackson Hole last Friday that Fed Chair Yellen’s just delivered speech was consistent with potentially two Fed Rate rises this year (a script no-one in truth really believed then, or now). In the event, it was less what Fischer said than the unexpected surge in the Conference Board’s US Consumer Confidence reading which printed 101.1 compared to last month’s 96.7 and 97.0 expected and in contrast to the less stellar University of Michigan version last Friday that looks to have been responsible for the fresh across-the-board gains in the US Dollar.
To mark my 1150th 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 80 points yesterday and is now ahead by 1695 points for August having made 1682 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.
We seem to be back in a situation where the currency markets are marching to a different tune than interest rate markets as yesterday despite the rise in the US Dollar, US Bond Yields actually closed lower than where they were trading ahead of either Fischer or the confidence data. The FX markets are seemingly more confident about the Fed intentions to lift rates this year than the Bond market. Or perhaps it’s that these clever Bond market traders are surmising that if the Dollar is going to start leaping once again, this in itself will play to Fed inaction as financial conditions tighten through the currency.
As for Stanley Fischer, he was not asked directly to clarify Friday’s remarks, but quizzed on whether the Fed is in a ”one and done” or ”two and done” situation needs to deliver a measured series of hikes. He replied ”I don’t think you can say one and done”. This might be more of a rebuttal of St Louis Fed President James Bullard’s now well-known views that the Fed should indeed be one and done from here, than a reference to the possibility of more than one rate hike this year alone. At a minimum though, Fischer appears keen to have markets price in more hikes down the road.
US Consumer Confidence aside, the other economic news yesterday was a downside surprise in German CPI which came in at 0.3% from 0.4% YoY on the HICP measure, not the expected rise to 0.5%. This suggests a similar downside surprise in the pan-Eurozone version later this morning.
Looking across the G10 currency spectrum, the Yen continues to be the favoured punch bag with USD/JPY up 1.1% to 103.20 since I posted 24 hours ago. Comments from Japan PM Abe’s adviser Honda that buying Foreign Bonds was an option for the BoJ if G7 peers consider FX intervention to be manipulation, might have helped here. However since buying Foreign Bonds is tantamount to intervention on a large scale – and in a world of unconventional Monetary Policy, direct interference with other countries’ Monetary Policy – I doubt this is a serious starter.
This morning on the economic front we have German Unemployment at 8.55 am. This is followed at 10.00 am by Euro-Zone Unemployment and CPI. At 1.15 pm we have the US ADP Employment Change and this number will be closely watched for any clues ahead of Friday’s NFP. Finally we have Chicago Purchasing Manager’s Index and Pending Home Sales at 2.45 pm and 3.00 pm respectively.
Speaking wise today we have the Fed’s Kashkari speaking in London at 1.00 pm on the Fed Structure. Later at 1.45 pm the ECB’s Vileroy speaks in Frankfurt.
September S&P 500
Surprisingly despite the European markets trading on the positive side yesterday, the S&P was heavy all day with the market eventually hitting my 2173 average buy level. I am still long and I will leave my stop unchanged at 2164 which is just below last Monday’s low print. With month-end today and the beginning of a new month tomorrow ahead of the key NFP data on Friday I find it hard to be short. If If I am stopped out of this position I will be a more aggressive buyer in front of 2157 with a 2151 stop.
EUR/USD
The Euro traded lower to my 1.1135 buy level very late in the New York session before having a small rally to 1.1162 overnight. As I was already long the S&P, Gold and Silver I emailed my Platinum Members to cut this position for a small gain at 1.1140 last night and I am still flat. The Euro has reasonable support at the 1.1070/1.1100 area and today I will again look to buy the Euro on any dip lower to 1.1080/1.1110 with a 1.1055 tight stop. My only interest in selling the Euro is still on an unexpected rally higher to 1.1195/1.1235 with a 1.1265 stop.
September Dollar Index
Unfortunately the Dollar just missed my 95.55 buy level with a 95.62 low print after I posted yesterday and I am still flat. Following last Friday’s upside Key Day Reversal it is difficult to be short and today I will now move my buy level slightly higher to 95.50/95.80 with a 95.15 stop.
September DAX
The lower Euro is certainly helping the DAX at this time and I am still flat. Today I will raise my buy level slightly to 10495/10555 with the same wider 10430 stop which is just below last Monday’s low print. The price action over the past few days is telling me not to be short the DAX at this time.
September FTSE
Just like the S&P and Dow the FTSE is also struggling to move higher despite the weaker Sterling. I am still flat and today I will lower my buy level to 6755/6785 with a 6725 stop. Despite the heavy price action I do not want to be short the FTSE especially with month-end today which traditionally leads to some Fund and Pension buying.
Dow Rolling Contract
The Dow hit my 18430 buy level yesterday before having a small rally to 18465. As I was already long the S&P and the fact that I am trying to protect our points gained for August I emailed my Platinum Members to cut this position at 18450 and I am still flat. Similar to the DAX been bid on the back of the weaker Euro, the stronger Dollar is having an adverse affect on the Dow. The Dow is not helped by the continuing weakness in the McClellan Oscillator which closed at -49 yesterday. It is incredible that with the US stock markets within 2% of all-time highs that internally the market is so weak and is one big worry as we head into September. Today I will again look to buy the Dow on any dip lower to 18310/18370 with a 18255 stop. I still do not want to be short the Dow at this time until we see a sell-extreme that lasts for more than a few hours.
September Bund
I am still flat the Bund which continues to trade in a very narrow range. Today I will raise my buy level slightly to 166.90/167.20 with a 166.50 stop. Remember a break and close below 166.60 has the potential to see an acceleration lower in the Bund, thus my tight stop on any long position.
Gold Rolling Contract
Finally Gold hit my 1311 buy level with a 1308 low print before rallying to a high of 1316 overnight. It was unusual for me to hold three positions overnight I lowered my T/P level in Gold to 1314 which was filled and I am now flat. There is no doubt the continued selling of Gold by the Venezuelan Central Bank is weighing on the market and today my only interest in buying Gold is on a dip lower to 1290/1298 with a 1283 stop.
Silver Rolling Contract
My Silver plan worked well with the market hitting my 18.60 buy level during my lecture in IG last night before thankfully rallying to a high at 18.88 overnight which enabled me to cover this position at my 18.85 T/P level and I am now flat. As I mentioned over the past few days, the 18.00/18.30 level is crucial for the bullish case. I would expect this level not to broken without a fight and today I will again look to buy Silver on any dip lower to 18.25/18.55 with the same 17.95 tight stop.
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