Euro slippage was initially the main feature after I posted following a Der Spiegel report that the Berlin division of the SPD would reject the vote to form a grand coalition with Merkel’s party. Once investors noted that this division only casts 23 votes out of 600 at this Sunday’s conference, the news was soon brushed off. Most analysts note that it is clear the conference will be a tough and long meeting and it is up to party leader Schultz to convince party members of the benefits of a partnership with Merkel’s Conservatives. Adding to the softer tone was a Reuters source report saying the ECB would maintain its bond-buying pledge when it meets next week (with March regarded as a more likely date for a change) and the ECB’s Villeroy de Galhau – tipped by some as Mario Draghi’s- successor – saying that the recent Euro appreciation is a source of uncertainty and requires monitoring as it could damp inflation. Regarding an ECB exit from its bond-buying programme, Villeroy said, ‘’we are not pre-committed in terms of precise timing. We will make this contingent on the actual progress made in achieving our inflation objective’’.
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 159 points yesterday and is ahead by 2 points for the month of 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.
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EUR/USD dipped below the 1.22 mark from 1.2282 before almost fully recovering (1.2280 now) as I post this commentary, on no obvious news. It does though appear to have got an added boost from reported comments by Bundesbank president Jens Weidmann in the German FAZ newspaper, despite the lack of evident hawkishness versus prevailing ECB guidance/market sentiment. Weidmann said analysts expectations for an interest rate hike by the European Central Bank in the middle of next year are roughly in line with the ECB’s own guidance.
You can’t keep a good man down, it seems, as John Miles sang in 1979. Selling US Dollar rallies, buying dips elsewhere, look like remaining the preferred modus operandi of the FX trading community for the time being.
In stocks, Despite taking a $22bn tax hit from lowering the value of assets on its book that the bank had planned to shield itself from taxes under the old, higher, corporate tax rates, Citigroup still beat its street EPS estimate of $1.19 ($1.28) after making allowance for this, and its share price jumped at the New York open, before giving back gains in the afternoon as part of broader market sell-off led by energy and materials in conjunction with a down day across commodity markets and which produced a little intra-day weakness in AUD, CAD and NZD. That said, AUD is now virtually unchanged on 24 hours ago near 0.7960. NZD is still net lower on the day, receiving only a very minor fillip from the overnight GDT dairy auction where average prices rose by 4.9% with whole milk powder up 5.1%.
Latest (Dec) UK inflation data showed annual CPI inflation easing for the first time in six months in December to 3.0%, as expected, although the core rate was a touch softer at 2.5%. There was little market reaction, best judged by the limited volatility in EUR/GBP surrounding the release time.
US data was confined to the Empire (New York State) Manufacturing Survey, dipping trivially to 17.7 from an upwardly revised 19.6 (was 18) and a 19 consensus. Details were weaker though, Employment down to 3.8 from 22.9, while New Orders were down to 11.9 from 19. Inventories rose from 1.4 to 13.8, while Prices Paid rose to 36.2 from 29.7. The Arctic weather in NY may have been a factor even though not referenced in the press notice.
This morning on the Economic Front we have the latest Euro-Zone CPI at 10.00 am and this is followed at 12.00 pm by the US MBA Mortgage Applications. Next we have Industrial Production and Capacity Utilisation at 2.15 pm. At 3.00 pm we have the NAHB Housing Index and the Bank of Canada Rate decision. Finally we have the Beige Book and the Total Net TIC Flows at 7.00 pm and 9.00 pm respectively.
Meanwhile the UK MPC Member Saunders speaks at 11.45 pm while at 8.00 pm it is the turn of Fed Member Evans.
March S&P 500
My S&P plan worked well yesterday with the S&P initially trading higher to my 2803 sell level before selling off to my revised 2798.50 T/P level. Subsequently I emailed my Platinum Members to re-sell at a price of 2808 with a 2802 T/P level which were both filled ahead of a trip south to a price of 2770 before we rallied small into the close. As I mentioned yesterday that today could be a key session and it was with a reversal in the three main US Indices. As a result of this reversal as long as the S&P can hold below today’s 2808.75 high print I will continue to be a seller on rallies. Today my sell level will be from 2795/2805 with a 2813 stop. I will still look to buy the market on any dip lower to 2748/2756 with a 2742 stop.
EUR/USD
The Euro which initially missed my 1.2290 sell level subsequently rallied to my revised 1.2275 sell level. As I wanted to have all members on the same page I covered this position at 1.2264 ahead of the New York and I am still flat. There is no doubt the ECB are unhappy with the sudden surge of the Euro while of course the Bundesbank are delighted with its progress. The next ECB Meeting promises some fireworks. Given the strength of the 1.23 resistance level I will again look to sell the Euro on any rally higher to 1.2290/1.2340 with a 1.2375 stop. My only interest in buying the Euro is still on a dip lower to 1.2010/1.2060 with a 1.1970 stop.
March Dollar Index
Twice the Dollar missed my 90.60 T/P level on my latest long 90.20 position and I subsequently emailed my Platinum Members to exit any long position at 90.45. This 89.60/90.10 area is key for the Dollar as a break and close below here could well see a further acceleration to the downside. As a result I have bought the Dollar here again at 90.00 with a 89.50 tight stop. My T/P level on this position will be 90.35.
March DAX
No change as I am still a buyer on any dip lower to 13000/13070 with the same 12950 stop.
March FTSE
Late in the New York session the FTSE traded lower to my 7655 buy level and after a subsequent rally I covered this position at my revised 7671 T/P level and I am now flat. There is no doubt the renewed strength in Sterling is hampering the FTSE which looks tired after its recent six week rally. The FTSE has good support from 7580/7620 and today I will be a buyer in this area with a 7545 stop.
Dow Rolling Contract
I am not having much luck this month with my Dow fills as shown yesterday when twice the Dow missed my second sell level at 26090 by a couple of points before subsequently selling off 400 points ahead of a late rally into the close. There is no doubt the increased volatility in the Dow is making points hard especially as you need a wider stop. The subsequently sell-off saw the Dow hit my 25940 T/P level on my latest 25980 short position from Monday and I am now flat. Given the extent of yesterday’s reversal I will now look to sell the Dow on any rally higher to 25980/26080 with a 26160 stop. I will also look to buy the Dow on any dip lower to 25400/25500 with a 25280 wider stop.
March NASDAQ
I had the right idea in being short the NASDAQ at 6785 but unfortunately I was stopped out of my short position near the high of the day at 6830 before the market fell 100 points and I am still flat. Today I will again look to sell the market on any rally higher to 6795/6840 with a 6875 stop.
March BUND
I am still flat the Bund and today I will now raise my buy level to 160.15/160.55 with a 159.80 tight stop.
Gold Rolling Contract
No change as I am still a small buyer on any dip lower to 1308/1318 with a 1301 stop.
Silver Rolling Contract
Silver had a wild trading session with the market trading the whole of my 16.90/17.20 buy range for an average long position at 17.05. As I have mentioned over the past few sessions I am now happy with the price action in Silver and I covered my long position at my revised 17.12 T/P level and I am now flat. Today my only interest in buying Silver is on a dip lower to 16.40/16.75 with a 16.10 stop. Otherwise I will stay flat and observe.
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