Seasonally light liquidity and end of year rebalancing flows continue to dominate price action. The USD index has slipped 0.2% and gains by G10 peers are broad-based, with the Swiss Franc, EUR and Canadian Dollar the top performers. The EUR/USD (+0.5% to 1.1946) showed little interest in reports the Italian PM will soon ask the country’s President to dissolve parliament, leading to an election as early as March. Resilience to political risk is hardly as new theme for the EUR. As we head into the final trading day of the year, the EUR sits atop the 2017 G10 FX leader-board with a gain of 13%, while the USD index has lost around 9%.
To mark my 1500th 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 in this offer can you please email me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it made 12 points yesterday and is now ahead by 918 points for December, having made 823 points in November and 657 points in October. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points.
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The AUD, NZD and CAD have all registered two month highs against the USD as commodity prices continue to surge. The Bloomberg Commodity Index rose for an 11th consecutive day. Metal prices are leading the way as copper futures hit the highest level since January 2014. Dr Copper, an oft cited barometer for global growth, is pointing to a stronger 2018. The AUD is now at 0.7794, after hitting an overnight high of 0.7810.
US equity indices closed flat again yesterday (S&P 500 +0.1%), while European stocks are mostly weaker.
US Treasuries consolidated some of the gains of recent days, which have been spurred by Quarter and Year-end rebalancing flows and duration extensions. Yields are 1-3bp higher since I posted 24 hours ago (10yrs 2.43%) and the 5-7y sector has led losses, keeping flattening pressure on key curve spreads like 5s/10s and 5s/30s. Treasury auctions remain challenged by end of year liquidity conditions, leading to larger than usual concessions and adding to the flatter curve theme. Like the preceding 2y and 5y offerings, last night’s $28bn 7y auction met tepid demand, clearing with a 1bp tail.
Meanwhile European bonds have mostly underperformed US Treasuries on the day (10y Bund +4bp to 0.42%).
With most European markets on a half-day ahead of Monday’s New Year’s Day Holiday the only data of note today on either side of the Atlantic is German CPI which is due to be released at 1.00 pm.
March S&P
Unfortunately the S&P just missed my 2682 buy level with a 2683 low print before rallying overnight and I am still flat. Despite this week having the smallest trading range for the US Indices for 2017, the VIX has again closed over 10 at 10.20, while the McClellan Oscillator continues to struggle with a +29 print despite all US indices at or near all-time highs. I am still flat the market and today I will raise my buy level slightly to 2677/2683 with a 2672 stop. I do not expect this incredibly low volatility to continue as I am expecting a volatile January especially as the US Yield curve starts to go negative which is always the first sign of an imminent recession. However as we are still in the seasonally strong time of the year I will leave my sell level unchanged from 2705/2713 with the same 2718 stop.
EUR/USD
I am still flat the Euro and today I will raise my buy level slightly to 1.1870/1.1910 with a higher 1.1730 stop. I still do not want to be short the Euro at this time as I am still looking for an initial move higher to 1.2250 over the coming weeks.
March Dollar Index
The Dollar continues to probe the 92.00 key support level and I am still flat. The Dollar is oversold and due a correction and today I will lower my buy level slightly to 91.60/92.00 with a tight 91.30 stop.
March DAX
I am still flat the DAX and today I will still be a small buyer on any dip lower to 12830/12895 with the same 12790 tight stop. The strength of the Euro continues to hamper gains in the DAX but despite the negative price action I am still not comfortable in going short the market until we break and close below the key 12700 support level for a couple of days. Remember the German markets including the Bund will close at 1.00 pm today.
March FTSE
The FTSE continues to trade in a narrow range as most traders on are still on holiday especially with the UK Equity Markets closing at 12.13 pm ahead of Monday’s Bank Holiday. I am still flat the FTSE and will leave my buy level unchanged from 7480/7520 with the same 7450 stop.
Dow Rolling Contract
The Dow was the strongest of the US Indices yesterday and I am still flat as the market traded sideways to higher all day. Today I will leave my buy level unchanged from 24630/24700 with the same 24570 stop.
March NASDAQ
No change as I am still a buyer on any dip lower to 6370/6410 with the same 6335 stop. Given the ongoing weakness in the FANG stocks I am reluctant to chase this market higher.
March BUND
The BUND just missed my 162.30 sell level with a 162.23 high print and I am still flat. With the BUND closing early at 1.00 pm until it re-opens at 7.00 am on Tuesday I am going to stay flat the market as I do not want to have an ‘’Open’’ position over the long weekend.
Gold Rolling Contract
Gold continues to test its next ley resistance at 1300, a break of which, should see an acceleration to the upside especially as most traders have sold any long positions during December’s aggressive sell-off to 1236. I am still flat and today I will continue to be a buyer on any dip lower to 1269.1277 with a 1262 stop.
Silver Rolling Contract
My Silver plan worked well with the market trading lower to my 16.70 buy level. As I wanted to bank some points for yesterday’s trading session I covered this position at my revised 16.82 T/P level and I am now flat. Today I will again look to buy Silver on any dip lower to 16.45/16.75 with the same 16.10 stop.
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