Judged by Equity, Bond, and Commodity markets, it has been well and truly a risk-on past 24 hours, but it has been more mixed as far as the currency market has been concerned. The AUD did test 0.7970 but was unable to hold that level and now sits back at 0.7940. In a similar vein, USD/CAD and USD/NOK did test lower levels, but have retraced despite a sizeable move up in oil prices, now by $2.20/bbl, +4½-5% for WTI and Brent, Brent pushing through $50/bbl. After the New York Close, RBNZ Assistant Governor and Chief Economist John McDermott has been speaking and has not been heavy-handed at all in talking down the NZD. Instead he spoke of the neutral interest rate now being 3.5%, that it’s falling, that core inflation is running at 1.4%, symptomatic of moderate inflation pressures. The NZD has tried to push a little lower, but the initial market reaction was marginal at most and since more than fully unwound.
To mark my 1375th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2750 for my Platinum Service which includes 1 to 4 updated emails throughout the trading day. This offer is open to both new and existing members and if anyone is interested can you please contact me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it made 58 points yesterday and is now ahead by 840 points for July, having made 1023 points in June, 1071 in May, 1376 in April, 1335 in March, 1481 in February and 1734 in January. Since I started this New Platinum Service it has averaged a monthly gain of over 1700 points.
The US Dollar has had a choppy past 24 hours, initially seeing some selling (Euro support after yet another stellar German IFO Survey) but recovering after better consumer confidence and just before the US Markets closed, a US procedural Senate vote (51-50) to advance the health care debate. The press is reporting that a vote on the Senate health bill could come later this week. Timing, whether there will be a vote, and what might be voted on are all still to play for, even talk of a “skinny repeal” bill.
Oil prices pushed higher yesterday, Saudi Oil Minister Kalid Al-Falih pledging to cut export shipments in August to 6mbpd, down 1mbpd from last August, and that the Saudis won’t act along. Energy and material stocks in the US have had a good day, up 1.26% and 1.16% respectively, with Dr Copper performing nearly as strongly as oil, up 3.29% on the LME, other base metals also performing strongly, as did iron ore and steel prices yesterday in China. Caterpillar’s results also shot the lights out, its shares up 5.8%.
Global bond yields are higher across the board (Germany 10y bunds by 5.8 bps and US 10s by 7.3), not hurt by strong readings from the German IFO Survey and the Conference Board’s measure of Consumer Confidence, both beating street expectations. It has been like a broken record reporting on accelerating German business conditions consistently for a year now and at record highs (at least since German unification).
Meanwhile the IMF urged the ECB to maintain its very stimulatory policy, seemingly having some impact in holding back the Euro during the session. Not to be outdone, US Consumers were not only more chipper in July but reported a further improvement in the job market, the net jobs plentiful index now at its highest level since 2001, some more comfort on perceptions of the jobs market from the street level for the Fed.
This morning on the Economic Front we have UK BBA Loans for House Purchase, GDP and Index of Services which will all be released at 9.30 am. This is followed at 3.00 pm by US New Home Sales. Finally at 7.00 pm we have the FOMC Statement. Will the FOMC’s statement change their formal expectation to start normalising the balance sheet from “this year” to Yellen’s press conference “relatively soon” elucidation? If so, that would indicate continuing confidence in the economy. And second, whether their words on inflation indicate any prevarication over getting back to 2% “over the medium term”. There is no press conference from Yellen post the FOMC Statement.
September S&P 500
The S&P made yet another new all-time high as the theme of never short the US stock market ahead of an FOMC Meeting continues to pay dividends. Unfortunately yesterday’s 2479 high just missed my 2482 sell level before the market had a late sell-off and I am still flat. Ahead of the FOMC I am reluctant to go short. The S&P has strong trend line resistance at 2493/2499 and today my only interest in selling the market is on a rally to this area with a 2505 wider stop. Meanwhile the S&P has good support from 2462/2468 and today I will be a buyer in this area with a 2457 stop.
EUR/USD
Frustratingly the Euro just missed my 1.1720 sell level with a 1.1712 high print before selling off as expected and I am still flat. Given yesterday’s reversal there is a very strong chance that the Euro’s seven month rally has now ended. For this reason I will now lower my sell level to 1.1690/1.1735 with a wider 1.1770 stop. My only interest in buying the Euro is still on a dip lower to 1.1450/1.1510 with the same 1.1420 stop.
September Dollar Index
My Dollar plan worked well yesterday with the Dollar trading lower to my second buy level at 93.50 before rallying into the close. After this rally I emailed my Platinum Members to exit their second 93.50 long position at 93.83 as I wanted to continue my theme of banking points when available. I am still long my original position from last Friday at 93.85. Today I will again add to this position on any move lower to 93.55 with the same 93.20 stop. In my opinion given the low Daily Sentiment Index reading it is only a matter of time before the Dollar rallies to reverse a large portion of the huge sell-off from 103.80 high made on January 3 this year.
September DAX
I am still flat the DAX which rallied to its 12300 resistance level before selling off into the close and I am still flat. Today I will continue to look to buy the market on any dip lower to 12100/12165 with a 12050 stop. Despite the DAX having strong resistance from 12300/12350 I do not want to be short the market at this time.
September FTSE
I am still flat the market and today I will now raise my buy level to 7270/7310 with a 7240 stop. Given the continued weakness in Sterling I still do not want to be short the market at this time.
Dow Rolling Contract
Unfortunately as I had a close by sell level in the S&P, I emailed my Platinum Members to increase their sell range in the Dow to 21710 which the market just missed with a 21690 high print. For those members who did sell the Dow at my original 21670 sell level then you should have made some nice points with the market subsequently selling off over 70 points. I am still flat and today I will again look to sell the Dow on any rally higher to 21690/21750 with a 21800 stop. Again if I am taken long and subsequently stopped out of this position I will be a more aggressive seller from 21850/21920 with the same 21980 stop.
September BUND
Unfortunately the Bund just missed my 162.70 sell level with a 162.57 high print before getting hit hard on the stronger German IFO Survey and I am still flat. Thankfully we had no buy level yesterday. Today I will now lower my sell level to 162.05/162.40 with a 162.70 stop which is just above Tuesday’s rebound high. I still do not want to be long the Bund at this time.
Gold Rolling Contract
Gold is still finding it hard to break the key 1255/1265 resistance level as the market continues to trade sideways which it has done for most of this year. I still do not trust this market and for this reason I will leave my buy level unchanged from 1226/1234 with the same 1220 stop.
Silver Rolling Contract
My Silver plan worked well as shortly after the European Markets opened yesterday morning Silver had a nice red candle and this sell-off enabled me to buy the market at 16.35 before Silver rallied to my 16.60 T/P level and I am now flat. Today I will again look to buy Silver on any dip lower to 16.05/16.35 with a 15.80 stop.
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