I wrote yesterday how the US Dollar had been sold lower on the back of the cautious comments from Fed Chair Janet Yellen the previous evening in her fireside chat with ex Bank of England Chief King. That selling continued after I posted yesterday morning with the Dollar weaker by a further 0.3% since this time yesterday, most just after Wednesday’s FOMC Minutes that were also tinged with the uncertain inflation outlook.
To mark my 1475th 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 in anyone is interested in this offer can you please contact me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it finished flat yesterday and is still ahead by 851 points for November, having made 657 points in October, 447 in September, 1560 in August, 1096 in July, 1023 in June, 1076 in May, 1335 in April, 1375 in March, 1481 in February and 1734 in January. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points.
On the back of the weaker US Dollar, Commodity prices have been supportive, especially iron ore that rose another sizeable $2.52/t, up 8.1% this week and 15.9% so far this month. Quite surprising given the cuts announced to steel and heavy industry in China to address pollution into the winter. Base metals were also a little higher, Copper up 0.13%, WTI oil +0.93%, but Gold down 0.12% to $1295/oz.
With the USD on the defensive (it’s also the US Thanksgiving Day holiday), the Euro has found support from another very strong set of numbers. There is also an emerging likelihood that German Chancellor Merkel may be able to put together an alternative grand coalition with the Social Democrats and forestall the need for another election. The Euro’s support came from even stronger Euro-Zone PMIs for November. The Euro is up 0.3% since this time yesterday, having continued to win further incremental support through yesterday’s quiet trading session.
While Germany’s Q3 GDP was not revised from its flash 0.8%/2.8% reading, the November PMIs again rose from already elevated levels. Germany’s Manufacturing PMI came in at 62.5 in November, up from 60.6, the Services sector at 54.9 from 54.7, suggesting that German export/industrial growth is leading the economy and continuing on through the last quarter of the year. The market would not be surprised should this morning’s German IFO Survey (that has already been shooting the lights out this year) stepped up again in November.
It was a not dissimilar picture for France with a manufacturing PMI of 57.5 in November and a Services PMI of 60.2. The Euro-Zone economy is well and truly up and running at a solid clip.
The ECB’s Villeroy and Coeure have been speaking yesterday. They have been talking about the strong self-sustaining growth upturn in the Euro Zone, but not publically pushing back hard against the ECB’s very accommodative monetary policy stance.
Banque de France Governor Villeroy was speaking in London, saying that all preparations need to be made to avoid a cliff-edge Brexit. He commented that the PMI surveys are “good news” for the Euro-Zone, but that the ECB must maintain an ample degree of monetary stimulus, which could be interpreted many ways depending on what ample means. Coeure said that Euro area recovery is robust and homogenous, that the internal demand driven upturn is “satisfying”, but his view is that the ECB deposit rate of -0.4% will stay at that rate for a long time.
The USD was losing some ground against Sterling too, though with no specific Sterling-side spur. There was with no revision to the UK’s second estimate of Q3 GDP (0.4%/1.5%) coming with a strong CBI Retailing Survey in November, though it has been put to one side having been hugely volatile month-to-month.
Price action in the Canadian Dollar has been choppier. After making up some ground against the USD, a weaker than expected print on Sep Canadian Retail Sales (+0.1% versus +1.0% expected) scuppered that support.
This morning on the Economic Front we have the German IFO Business Climate/Current Assessment at 9.00 am. This is followed at 9.30 am by UK Finance Loans for Housing. Finally we have the US Manufacturing/Services PMI at 2.45 pm.
December S&P 500
Just as I posted yesterday morning the DAX rebounded nearly 150 points off its early morning low and this move higher helped propel the S&P higher. Today is ‘’Black Friday’’ traditionally the biggest shopping day in America of the year with the stock markets only open for a half day with the Futures Market closing at 6.15 pm Irish time. In light of yesterday’s move higher I will now raise my buy level in the S&P to 2584/2590 with a 2579 stop. I still do not want to be short the S&P at this time.
EUR/USD
I am still flat the Euro which traded as expected in a very narrow range yesterday due to the Thanksgiving Holiday. Today I will leave my buy level unchanged from 1.1765/1.1805 with a 1.1730 stop which is just below last Wednesday’s 1.1731 low print. There are more ECB speakers later today (Nuoy, Constancio, and Coeure again) which may lead to some Euro volatility.
December Dollar Index
The Dollar just missed my 92.85 buy level yesterday and I am still flat. Given the significance of the 92.50/92.85 support level I will leave my buy range unchanged with the same 92.20 stop on any long position executed.
December DAX
The volatility in the DAX has certainly returned with the market again rallying hard off the key 12850/12900 support level. It looks like Merkel will be able to form a Grand Coalition and this perception is helping to stabilise the market. Today I will now raise my buy level to 12860/12920 with a 12810 stop. As we head into the weekend I am reluctant to chase this market much higher. I still do not want to be short the DAX at this time.
December FTSE
Despite the strength of Sterling the FTSE recovered well off yesterday’s low which just missed my 7360 buy level and I am still flat. The fact that the market was able to close again above its 100 Day Moving Average at 7385 is another positive. Today I will now raise my buy level to 7365/7395 with a 7330 stop.
Dow Rolling Contract
In hindsight I should have held on to yesterday’s 23470 long position given the nice move higher that started just after I posted yesterday morning. Today I will now raise my buy level slightly to 23430/23490 with a 23385 stop. Given the seasonality I still do not want to be short the Dow at this time.
December NASDAQ
I am still flat the market and today I will now raise my buy level to 6320/6350 with a 6280 stop. Remember it will take a break and close below 6260 for the market to turn temporarily bearish.
December BUND
The Bund has traded in a narrow range over the past week and I still flat. In light of the much stronger Euro-Zone economic data I will now lower my sell level in the market to 163.30/163.65 with a 163.95 stop. I still do not want to be long the Bund at this time.
Gold Rolling Contract
No change as I still a buyer on any dip lower to 1269/1276 with a 1262 stop. Given the fact that I am already long Silver I am reluctant to chase the Gold market higher.
Silver Rolling Contract
No change as I am still long the market at 17.10 with the same 17.20 T/P level, which missed by 2/3 points yesterday. I will now raise my stop on this position to 16.75 and if any of these scenarios is hit I will be back with anew update for my Platinum Members.
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