Positive economic data releases yesterday have helped reinforce the view that the ongoing broad based global economic recovery still has a lot of legs. US equities are again making new highs and barring Mexico (MEXBOL Index) all other major equity indices have closed in positive territory. The risk positive environment continues to weigh against the US Dollar with a strong ADP report only providing a short lived boost to the greenback. Core global bonds are mixed and the US Treasury curve has flattened a little bit more with the move led by the front end of the curve.
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 15 points yesterday and is now ahead by 75 points for January, having made 946 points in December, 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.
I have a YouTube Channel which contains recent interviews I have given. This can be viewed by clicking HERE. Please subscribe to this for new interview notifications.
The kiwi is the best performing G10 currency, up almost 1% and it seems to be a story of third time lucky. Since late December, the NZD has made two fail attempts to break above 0.7130 and last night on its third go, the non- flying bird decisively punched through the level and currently trades at 0.7162, its highest level since October 18.
Meanwhile a positive global growth backdrop along with a healthy risk appetite, as evident by the sea of green in equity indices and low volatility levels (VIX Index is currently trading at 9.12 after ending 2017 at 11.04) is benefiting growth/risk sensitive currencies and the Kiwi has been then main beneficiary with the break above 0.7130 fuelling the move higher.
The Australian Dollar has also benefited from this environment, up 0.36% on the day and remains comfortable on its upward trend which started on December 9, after the pair reached a six month low of 0.7504. The Aussie currently trades at 0.7864 and it is now on its six consecutive day above the 78c mark.
Commodities have also benefited from the positive global backdrop with Iron ore leading the way, up 1.61% and closing the day at $74.61. After a couple of soft days, copper has also managed to post some gains up +0.12%. Meanwhile oil prices (WTI +0.44%, Brent 0.13%) have continued to climb supported by news that US stockpiles dropped by more than expected (EIA reported inventories fell by 7.4 m/b in the week ending 29 Dec vs 4.7 fall expected). Anti-Government protests in Iran have also been a supporting factor for oil prices.
Looking at other major currencies, the Euro is up 0.42% over the past 24hrs supported by solid PMI data (see below). The prospects of further broad based growth in the Euro-Zone will support the hawks within the ECB calling for an end to QE in September. This is a view that I have endorsed and is an important driver for my expectations for the Euro to trade in a 1.18-1.23 range in H1-18, rising above 1.25 in the second half of 2018. Meanwhile Sterling has recovered some of yesterday’s losses, supported by a solid services PMI print (see below). I continue to look for GBP/USD to climb to 1.40 and then above in coming weeks and through 2018.
The Economic news was positive yesterday as mentioned above:
– Euro-Zone final Dec services PMI up a tenth from the flash to 58.6, taking the composite to 58.1 – highest since Nov 2011. No big surprises.
– UK Dec services PMI comes in at 54.2 vs 54 consensus and 53.8 Nov. This measure had dropped recently to trade nearer the bottom of a 53.2-56.2 post Brexit range – though yesterday saw a small improvement.
– The December US ADP Private payrolls number beat expectations coming at 250k, well above the 190K expected by consensus.
– US Jobless claims rose to 250K from 247K, above the 240K expected by consensus
Finally the Fed’s Bullard (non-voter) was speaking yesterday afternoon where he noted that tightening labour market with falling unemployment is unlikely to budge inflation because price expectations have been held in check by an explicit inflation target. Central banks have become better and better at inflation targeting, and that this success has driven the Phillips curve slope to zero.
This morning on the Economic Front we have German Construction PMI at 8.30 am and this is followed at 9.30 am by UK Unit Labour Costs and Euro-Zone PPI/CPI at 10.00 am. At 1.30 pm the main focus will be on the US labour market data with the market looking for a Non-farm payrolls print of 190k, unchanged Unemployment at 4.1% and a small uptick in hourly earnings to 0.3%mom from 0.2% previously (2.5%yoy unchanged). The Trade Balance will also be released at the same time. Finally we have Factory Orders and ISM Non-Manufacturing at 3.00 pm.
Later at 3.15 pm and 5.30 pm the Fed’s Harker and Mester will speak respectively on the Economic Outlook.
March S&P 500
There is just no stopping this US Bull market with all three main US Indices again closing at new all-time highs driven by better economic growth and a falling US Dollar. Yesterday’s move higher saw the S&P trade the whole of my 2715/2723 sell range with a 2728.75 high print. This move higher has me short at an average rate of 2719 and nervous as we wait for the NFP data at 1.30 pm. Friday’s late sell-off in the S&P in which the market fell 30 Handles now looks like a rogue move and certainly put me on guard to a possible top in the market but unfortunately this proved to be nothing more than a shake out before strong buying again emerged. I will leave my stop unchanged at 2729 and if I am stopped out of this position I will again look to sell the S&P on any further move higher to 2732/2740 with a 2746 stop. The S&P is now trading outside the top of its Daily Bollinger Band and at the top of its Williams Index with a still massive 2668/2682 ‘’Open Gap’’ left unfilled from Friday’s Chicago close to Tuesday’s afternoon low print. Given the extent of the move higher this week I will now look to buy the S&P on any dip lower to 2700/2708 with a 2694 stop.
EUR/USD
I am still flat the Euro and today I will move my buy level higher to 1.1980/1.2020 with a 1.1945 stop. Given how overbought the Euro is trading I will now look to sell the market on any further move higher to 1.2140/1.2200 with a 1.2250 stop.
March Dollar Index
The Dollar traded lower to my 91.60 buy level. I am still long with a now lower 91.80 T/P level on this position. I will only add to this trade on any further move lower to 91.15 with the same 90.95 stop. If my second buy level is filled before I manage to cover at 91.80 I will be back with a new update for my Platinum Members.
March DAX
Thankfully we had no sell level in the DAX which is now trading nearly 500 points higher than last Tuesday’s early more low print. As I mentioned yesterday the DAX has strong resistance just above here at 13200 ahead of even stronger resistance at the 13330 level which was the recent high in December. I am still flat the market and today I will raise my buy level to 12990/13050 with a 12940 stop. Even the strength of the Euro is not preventing the DAX from rallying and for this reason I still do not want to be short the market at this time.
March FTSE
Despite both the US and European Markets rallying the FTSE is struggling to move higher despite the fact that the market is trading at all-time highs. I am still reluctant to chase this market higher and today will only raise my buy level slightly to 7540/7580 with a 7495 wider stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
As I am short the S&P, I waited to sell the Dow which I did at 25080. I am still short and will only add to this position on any further move higher to 25150 with a now higher 25205 stop. Given the extent of the move higher my only interest in buying the Dow is on a move lower to 24690/24750 with a 24630 stop.
March NASDAQ
For a change the NASDAQ which did make a new all-time high struggled to rally further in comparison to both the S&P and Dow. I am still flat and will continue to be a seller on any further rally to 6660/6720 with the same 6780 wider stop. I still do not want to be a buyer of the NASDAQ at this time.
March BUND
The Bund continues to trade in a narrow range on low volume and I am still flat. Despite the strength of the German and European Economies the Bund refuses to sell-off. As a result I will not chase this market higher and will leave my buy level unchanged from 160.50/160.90 with the same 160.15 stop. The Bund has strong resistance at last week’s 162.37 high print and today I will be a small seller on any rally higher to 162.35/162.75 with a 163.05 stop.
Gold Rolling Contract
I am still flat the market which rallied late after an early sell-off. Today I will be a buyer on any dip lower to 1294/1302 with a 1286 stop.
Silver Rolling Contract
My latest long 17.00 Silver position worked well with the market eventually following Gold higher to hit my 17.15 T/P level and I am now flat. Today I will again look to buy the market on any dip lower to 16.75/17.05 with a 16.45 stop. If I am taken long I will have a T/P level at 17.25.
Recent Comments