The bounce in all things EUR during Friday’s London session on news of European Council agreement on dealing with migration issues carried into the US session and proved to be a rising tide that floated all boats, in G10 currencies at least where the USD fell against everything bar JPY (-0.25%) to be 0.9% down in DXY terms. NZD again underperformed, rising by just 0.1 (versus over 0.7% for the AUD) to be the weakest G10 currency on the week by far (down over 2%). Initially this morning, EUR/USD gave back 40% of Friday’s 1% rise, after Horst Seehofer, the chairman of the CSU (the Bavarian sister party for Angela Merkel’s CDU) came out Sunday saying that the EU’s migration plan is not in line with the party’s demands. But just before the US Futures Markets opened last night, Seehofer has quit both as Interior Minister and CSU party chairman, news that has seen EUR/USD fully retrace the early-day losses.
To mark my 1625th 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 on Friday and closed June with a gain of 994 points,, having made 1927 points in May, 1657 points in April, 1760 points in March, 2256 points in February, 879 points in January and 946 points in December. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
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A 2% rebound in the Shanghai Composite index Friday and a small-pull back in both USD/CNH and USD/CNY from intra-day highs above 6.65 and 6.64 respectively, allowed for a small pull up in ADXY and this plus the suction from the stronger EUR saw AUD/USD lift back onto a handle (closing in NY at 0.7405).
AUD initially struggled to maintain a foothold on the 0.74 level first thing this morning, thanks both to the earlier give-back in the EUR and perhaps also in reaction to Saturday’s China PMI data, where the official manufacturing version came in at 51.5 down from 51.9 in May and just beneath the 51.6 expected. The services PMI was slightly better than expected at 55.0 up from 54.9 but the overall Composite PMI was still down 0.2 to 54.4. But the bigger influence is evidently EUR/USD, hence the jump in the latter has pulled AUD back up to (just above) Friday night’s highs.
US stocks underperformed relative to Shanghai and European bourses on Friday but the three main US indices just managed to close in the black, with the VIX losing three-quarters of a point to close at 16.1. This though did not prevent it being a universally down week, with the DAX and NASDAQ both off more than 2%, underperforming what turned out to be a loss of just 1.5% overall for the Shanghai Campsite. However this morning the late sell-off in US Indices has continued with the main US Futures Markets down close to 1%
In bonds, Treasury yields were fairly uniformly higher on the day (up about 2bps) in conjunction with a risk positive response to the European news and with nothing in terms of the US data flow as yet to suggest tangible negative impact from the trade concerns the Fed has been busy articulating. The 2s/10s US curve is nevertheless another 2bps or so flatter on the week.
The US core PCE deflator printed at 0.2% in line with expectations, though rounding meant that the year-on-year rise was 2.0%, above the 1.9% expected and up from 1.8% in April, so now ‘’at target’’. Personal Spending disappointed at 0.2% versus 0.4% expected, while the final University of Michigan Consumer Sentiment Index slipped to 99.2 from 99.3 (probably reflecting late month equity market wobbles). In contrast the Chicago June PMI lifted to 64.1 from 62.7, well above the 60.0 expected.
In Europe earlier Friday, UK Q1 GDP was revised to 0.2% from 0.,1% – helping Sterling while June EC HICP printed at 2.0% as expected (up from 1.9%) so now also at target, though the core HICP measure slipped to 1.0% from 1.1%.
In commodities, the contrasting fortunes of oil (up) and most base metals (down) continued, with Brent adding another 2% and LMEX down 0.25% while iron ore and coal were little changed. On oil specifically, U.S. President Donald Trump on Friday might claimed he had persuaded Saudi Arabia to effectively boost oil production to its maximum capacity to cool down prices, a move that threatens to blow up a fragile truce agreed by OPEC last week and inflame the Saudi-Iran rivalry.
‘’Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & disfunction in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference…Prices to high! He has agreed!,’’ Trump tweeted. However, the state-run Saudi Press Agency reported that while the two leaders stressed the importance of maintaining oil-market stability, the agency did not say the leaders agreed or make any reference to 2 million barrels. Indeed, the White House is already distancing itself from Trump’s 2 million barrels claim.
This morning on the Economic Front we have Euro-Zone Manufacturing PMI at 9.00 am and PPI at 10.00 am. This is followed at 2.45 pm by US Manufacturing PMI. Finally we have Construction Output and ISM Manufacturing at 3.00 pm.
September S&P 500
The S&P just missed my 2747 sell level with a 2745 high print before selling off 25 Handles into the close. This move lower was led by Bank stocks which got hit hard despite the positive news from earlier that most of them had passed the latest stress test. When I was trading professionally in BNP Dublin it was reiterated to me day after day that a market that cannot rally on good news is a dangerous market. As a result of this late sell-off coupled with the worsening political situation in Germany I emailed my Platinum Members at 9.00 pm last night to cancel all buy orders in the Dow S&P and German DAX and I am still flat. If you did buy the Dow and S&P after the Futures Markets opened at 11.00 pm then you had a profit but you had to be quick before the S&P got hit hard to a low so far of 2702. With the US Markets closed on Wednesday for the July 4th Holiday trading rooms will be understaffed this week on what is traditionally a positive week for equity markets. Today I will be a buyer of the S&P on any further dip lower to 2685/2693 with a 2678 stop. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer from 2660/2670 with a 2654 stop.
EUR/USD
The Euro is still trying to build a base above the double bottom at 1.1510. I am still flat and today I will now raise my buy level slightly to 1.1545/1.1590 with a 1.1505 stop. The Euro needs to break and close over 1.1775 to say that we have put in a more sustained bottom in the market. A break and close over this resistance level signals a move to 1.1910/1.1955 and possibly higher.
September Dollar Index
No change as I am still a seller on any rally higher to 95.05/95.45 with a 95.75 stop.
September DAX
The worsening political situation in Germany sees the DAX opening lower this morning. I am still flat and today I will again look to keep an eye on the key 12050 support level which is only a 100 points below current prices. Today I will be a buyer on any dip lower to 11995/12065 with a 11935 tight stop. Despite the weak market I do not want to be short the DAX at this time.
September FTSE
This morning the FTSE has opened below Friday’s buy range as it follows the other main Indices lower. The renewed rally in Sterling is also hampering the FTSE at this time. I am still flat and my only interest in buying the market is on a further dip lower to 7410/7450 with a 7385 stop. Despite the negative price action I still do not want to be short the market at this time.
Dow Rolling Contract
This morning the Dow is trading over 400 points lower from its intra-day high made on Friday and thankfully I am still flat per last night’s email to my Platinum Members. The Dow needs to stay above its key support level at 23700 for the bulls to remain in control but a break and close below here will be a worry especially as the Dow is again trading below its 200 Day Moving Average this morning. Today I will be a buyer on any further dip lower to 23780/23960 with a wider 23650 stop. Given the volatility I am only trading in smaller size with a wider stop. As this is historically a positive week for the Dow I still do not want to be short the market at this time.
September NASDAQ
The NASDAQ has also opened lower with the market hitting my 7000 buy level. I will look to add to this position on any further move lower to 6950 with a 6920 stop. I will now lower my T/P level on this position to 7030 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
September BUND
The weaker equity markets sees the Bund rally strongly. I am still flat and today I will again raise my buy level slightly to 161.80/162.20 with a 161.45 stop. Despite the insanely low yield the price action tells me not to be short the Bund at this time.
Gold Rolling Contract
The Daily Sentiment Index has fallen to just 8% bulls which is the lowest reading since December 15, 2016 when we had a 4% print. As long as we can hold the trendline support at 1236 then it should only be a matter of time before we see the start of a robust rally. As I am still long Silver I will now lower my buy level slightly to 1232/1240 with a 1225 stop.
Silver Rolling Contract
No change as I am still long at 16.10 with the same 16.30 T/P level. I will look go add to this position on any move lower to 15.80 with the same 15.55 stop. The DSI for Silver also closed at 8% bulls on Friday which is the lowest reading since the 6% print in December 2016. Silver rallied over 18% from the December 2016 low in a few weeks. If any of the above levels are hit today I will be back with a new update for my Platinum Members.
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