After a brief positive start US equities ended the day in negative territory, the US Dollar is stronger across the board and US Treasury yields are lower with the move led by the back end of the curve. Oil prices are higher after Israel accused Iran of having a secret plan for building nuclear weapons and in general there is a sense of cautiousness as the market awaits for Washington’s decision on whether or not the EU will face the new tariffs on steel and aluminium.
To mark my 1580th 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. To demonstrate this value, a monthly subscription over the same period would cost 4440 euro in total. This offer represents a 38% discount and is open to both new and existing members. 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 was flat yesterday as it closed April with a gain of 1657 points, having made 1760 points in March, 2256 points in February, 879 points in January, 946 points in December, and 823 points in November 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 USD has started the week on a strong footing partly aided by solid domestic data releases. Politics and softer data releases weighed on European currencies while a looming US EU trade tariff decision along with US-China trade talk news have not helped risk sensitive currencies. In index terms the USD is up around 0.35% on both DXY and BBDXY with SEK and commodity linked currencies the big underperformers.
As expected the March US core PCE reading (the Fed’s preferred inflation measure) printed at 0.2%m/m taking the yoy print to 1.9%. Base effects were the primary driver for the 0.3% jump in the yoy reading to 1.9%, but notably the six-month annualised figure has also picked up over recent months and is now running at a 2.3% pace. The move higher in the PCE reading has been flagged by some Fed officials and after a prolong period of inflation printing below the 2% target, for now the general senses is that the Fed will allow inflation to run marginally above target for some time. Still, the main takeaway here is that unlike other economies, US inflation is now essentially on target and the prospect is for inflation to rise further over the coming months. Thus if this trend continues as expected the risk is that the Fed will need to do more tightening and not less.
Early in the session the USD was on the rise amid softness in European currencies, the USD briefly traded lower after the PCE release, recovering most of the lost ground before the NY close. March German Retail Sales disappointed ( -0.6% vs 0.8% exp.) while soft German (Apr: 1.4%y/y vs. 1.5% exp.) and Italian ((Apr: 0.6y/y vs. 0.8% exp.) inflation readings did not help the Euro either. Politics were an additional hindering factor after Italy’s Five Star head Luigi Di Maio called for new elections in June. EUR traded to an intra-day low of 1.2064 and now trades at 1.2060, down 0.44% over the past 24hrs.
Sterling also opened the European session lower following earlier news that Amber Rudd, a key ally of UK PM May, had resigned and was replaced by Euro-skeptic Sajid Javid as Home Secretary. Meanwhile the EU’s chief negotiator Barnier said that Brexit talks could yet fail as the EU and UK grapple with the Irish border issue. The pound initially traded to a low of 1.3713, but latter in the session it recovered a little and now trades at 1.3750. SEK has been the biggest loser, down almost 1%, the pair remains under pressure after last week’s Riksbank decision to push back on a plan to raise interest rates for the first time in seven years. SEK now trades at 8.7426, its weakest levels since June last year.
Antipodean currencies have also underperformed with both AUD and NZD down about 0.7% since Friday’s close. NZD now trades at 0.7035 and on the chart it looks like it has room to trade lower. Meanwhile the AUD currently trades at 0.7530 with the December low of 0.7509 still looking like a key support level. That said, overall, the AUD and NZD are probably a little bit under pressure amid market cautiousness ahead of the US-EU trade tariff announcement. Also overnight and ahead of US trade officials meeting with China counterparts, the NY Times reports that China will refuse to discuss Trump’s two toughest trade demands, namely the mandatory $100b cut in U.S.-China annual trade deficit and curbs on China’s $300b plan to support the country’s industrial upgrade into advanced technologies.
Geopolitics in the Middle-East did not helped sentiment after Israel accused Iran of having a secret plan to continue building nuclear weapons. Brent jumped 0.71% ( WTI +0.51% @$68.45) and now trades above the $75 mark for the first time since later November 2014. Israeli PM Netanyahu said his country has proof Iran had a secret programme to build nuclear bombs, and referring to the Iranian deal, President Trump left everyone guessing saying that US would quit the accord by May 12, the deadline he has set for a decision, only to add ‘’That doesn’t mean we won’t negotiate a real agreement’’.
Looking at other commodities, iron ore closed essentially unchanged at $65.7, coal prices had a good session, up between 2% and 3% while gold is a touch lower and copper a smidgen higher.
US equities closed Monday down between 0.60-0.75% with losses led by the tech sector (note Apple reports this evening) and earlier in the session, the Stoxx Europe 600 Index rose 0.18%, and the FTSE 100 Index edged up by 0.09% with retailer J Sainsbury Plc jumping 2.45% as it plans to buy Asda, Walmart Inc’s U.K. arm.
This morning on the Economic Front we have UK Manufacturing PMI and Mortgage Approvals at 9.30 am. We have no data from the Euro-Zone as most countries are closed for the ‘’May Day’’ Holiday. Next we have US Manufacturing PMI at 2.45 pm. Finally we have Construction Spending and ISM Manufacturing at 3.00 pm.
June S&P 500
The beauty of my Platinum Service is my updated emails especially when I change my view on a trade. Yesterday after the S&P traded the whole of my 2659/2669 buy range for an average long position at 2664 the S&P subsequently made in interim low at 2654.50 before bouncing 10 Handles. Immediately I emailed my Platinum Members to exit any long position for a small loss at 2663. The S&P traded at this level for the next 15 minutes before getting hit hard and I am still flat. Given the fact that yesterday was month-end I was surprised by how weak the US Indices were especially given the impressive earnings results reported so far over the last two weeks. With the FOMC Meeting tomorrow I do not want to be short the market as the S&P tends to rally ahead of this key event. However I have to respect the price action especially as the market closed below the 2660/2670 level. The S&P has good support from 2628/2638 ahead of strong support at last week’s 2611 low print which of course is where the 200 Day Moving Average sits. Today I will be a buyer on any dip lower to 2631/2640 with a 2625 stop. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer on any further dip lower to 2605/2615 with a 2598 stop. Remember a break and close below 2605 is a strong sell signal. With the FOMC Meeting tomorrow I do not want to be short the S&P at this time.
EUR/USD
This morning the Euro has traded lower to my initial 1.2060 buy level. The Euro has strong support just below here at 1.2040 and I will add to this position on any further move lower to 1.2010. I will now lower my T/P level on this position to 1.2075. If my second buy level is filled first I will then lower my T/P level to 1.2050. Meanwhile I will leave my stop unchanged at 1.1970.
June Dollar Index
I am still flat the Dollar and today I will now raise my buy level to 90.80/91.20 with a higher 90.45 stop. I still do not want to be short the Dollar at this time.
June DAX
Germany is closed today for the May Day Holiday. Even though the spreadbetting firms are making prices in the DAX today I prefer to wait until the Futures Market re-opens tomorrow morning and I will stand aside.
June FTSE
Unfortunately the FTSE just missed my 7420 buy level overnight before rallying and I am still flat. Today I will leave my buy level unchanged from 7370/7420 with the same 7335 stop. The FTSE is severely overbought and due a correction but as long as Sterling stays weak it is difficult to be short the market.
Dow Rolling Contract
In the email that I sent to my Platinum Members to cut any long S&P position I also said to lower their Dow buy level to 24200. This was subsequently filled before the market rallied 75 points and this move higher enabled me to cover my long position at my revised 24260 T/P level and I am now flat. The Dow traded to a 24120 low overnight which is nearly 400 points lower than the high made at lunchtime yesterday. I still believe the downside is limited from here as internally the McClellan Oscillator only closed with a -37 print. I would expect limited downside action ahead of the FOMC tomorrow. Today I will again look to buy the Dow on any dip lower to 23930/24080 with a 23860 stop.
June NASDAQ
The NASDAQ got hit hard yesterday with the market now trading over 170 points lower that the highs made last Friday. Yesterday’s move lower saw the market hit my 6630 buy level. I am still long with a lower 6650 T/P level. I will still look to add to this position at 6590 and if my second buy level is filled I will then lower my T/P level to 6625. Meanwhile I will leave my stop unchanged for now at 6545.
June BUND
I am still flat the Bund with the market just missing my sell level last night on the back of the stronger US Bond Markets. The Bund is closed today and I will stand aside and wait until the market re-opens tomorrow before giving a new signal for the market.
Gold Rolling Contract
I am still flat Gold which traded weak all day. I will leave my buy level unchanged from 1295/1303 with the same 1289 stop.
Silver Rolling Contract
As expected I was stopped out of my long 16.85 Silver position at 16.35. Subsequently Silver made a new low at 16.17 before bouncing. Managed Money Accounts have gone from a record net-short 39,604 contracts three weeks ago to a net-long 4697 contracts this past week. As a result of this information I bought Silver again yesterday at 16.32. I will add to this position on any move lower to 15.90 with a 15.65 stop. I will lower my T/P level on this position to 16.60.
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