The Interest Rate markets have come under pressure over the past 24 hours with speculation over the Bank of Japan policy decision today pushing core global yields higher. The US Dollar is weaker across the board, the AUD has been a bystander and SEK the outperformer. US equities are weaker, led by further declines in the tech sector, as investors rotate out of this sector following some high-profile earnings misses.
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@tradernoblecom for details
For anyone following my Platinum Service it made 87 points yesterday and is now ahead by 1047 points for July, having made 994 points in June, 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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Currencies
The USD has been the worst performing of the majors for no particular reason, with a steady grind lower since the European open. AUD is little changed currently trading at 0.7406 unable to materially benefit from a softer US. Meanwhile SEK is at the top of the leader board, up over 1% to 8.77, boosted by Sweden’s Q2 GDP of 1.0% q/q that smashed expectations of a 0.5% rise.
Against a soft USD, the yen has made little progress and USD/JPY sits close to 111, with some nervousness ahead of this morning’s BoJ policy announcement. The last week or so has seen reports that the BoJ may either review its yield curve control policy or tweak its operation, with the idea to improve the longevity of the stimulus programme and reduce the harm it causes to the profitability of commercial banks. It seems that the BoJ would be happier to see long term rates increase but it does not want to see a concurrent appreciation of the yen. It is a difficult balancing act and the central bank will need to get its messaging right.
Bonds
Fears of higher JGB yields means fears of weaker Japanese demand for foreign bonds and this has seen global rates increase recently. Those moves extended yesterday, with UK 10-year rate up 6bps to 1.34% and Germany’s 10 year rate up 4bps to 0.44%. That backdrop has seen US 10-year Treasuries nudge up 2bps to currently trade at 2.975%, after reaching a fresh July high of 2.99%. A slightly steeper curve is evident, with the 2-year rate flat.
Equities
The negative lead from Asia which saw the Shanghai Composite closed down 0.16% extended into the European and US sessions with all major Indices showing negative returns for the start of the week. The NASDAQ has once again led the decline as investors rotate out of IT shares following a string of disappointing earnings results. The NYSE FANG Index is now down over 9% through the past three trading sessions.
Commodities
It has been a contrasting day for commodities, oil prices are up between 1% to 2 % driven by news that a key Canadian facility won’t return to full production as quickly as expected, adding to global supply concerns. Iron ore, gold and metals are little changed, but steam coal is the big loser, down 3.67%.
Economics/Politics
US Commerce Secretary Ross indicated that trade negotiations with Mexico under its new President were proceeding rapidly and were close to completion. This follows US Trade Rep Lighthizer’s comments last week indicating some hope that NAFTA talks are in the ‘’finishing stages’’. It remains to be seen whether a bilateral deal with Mexico will be agreed before negotiating separately with Canada.
– EC: Economic Confidence, Jul: 112.0 vs. 112.1
– German: CPI EU harmonised (y/y%), Jul: 2.1 vs. 2.1 exp.
– US: Pending Home Sales (m/m%), Jun: 0.1 vs. 0.9 exp.
This morning on the Economic Front we have the Bank of Japan Outlook Report/Monetary Policy Statement. This is followed at 8.55 am by German Unemployment. Next we have Euro-Zone Unemployment, GDP and CPI at 10.00 am. At 1.30 pm we have the US PCE Deflator. Finally we have the Chicago Purchasing Managers Survey and the Conference Board Consumer Confidence at 2.45 pm and 3.00 pm respectively.
September S&P 500
My S&P plan worked well with the S&P trading lower to my 2802 buy level before rallying to my 2806 T/P level and I am now flat. I am still bullish the S&P as long as we hold above the 2780/2790 support level. Ahead of the FOMC Meeting I will again look to buy the S&P on any dip lower to 2788/2796 with a 2779 stop. If the S&P can break 2792 and close below 2780 it will be the first sign of a move lower to the mean reversion from 2700/2735. For now I will continue to be a buyer on dips but I am watching the 2780/2790 support level closely.
EUR/USD
Unfortunately the Euro never came close to my buy level before again rallying as expected. I am still flat and today I will now raise my buy level to 1.1620/1.1660 with a 1.1580 stop.
September Dollar Index
The Dollar traded lower to my 94.10 buy level. I am still long and I have now lowered my T/P level on this position to 94.25. Meanwhile I will now raise my stop on this position to 93.65. If any of the above levels are hit I will be back with a new update for my Platinum Members.
September DAX
I am still flat the DAX which continues to outperform the US Indices at this time. However I am reluctant to chase the market higher and today I will continue to be a buyer on any dip lower to 12600/12670 with the same 12530 stop.
September FTSE
I am also reluctant to chase the FTSE market higher especially ahead of the Bank of England Policy Meeting on Thursday. Therefore I will leave my buy level unchanged from 7510/7555 with the same 7475 tight stop.
Dow Rolling Contract
Very late in yesterday’s trading session the Dow traded lower to my initial 25300 buy level. As I wanted to be flat overnight ahead of the BoJ Policy announcement I emailed my Platinum Members to exit any long position at my revised 25330 T/P level and I am now flat. As long as the Dow can hold the 24800/25050 support area I will still be a buyer on dips. Today my buy level will be from 25060/25195 with a 24975 stop. Ahead of the FOMC Meeting tomorrow I still do not want to be short the Dow at this time.
September NASDAQ
Initially the NASDAQ traded heavy before stabilizing over the last couple of hours of trading after the big falls over the previous three trading sessions. Yesterday after the NASDAQ traded lower to my 7225 buy level we had a small bounce and I used this move higher to cover my long position at my revised 7242 T/P level as emailed to my Platinum Members and I am now flat. The NASDAQ now has strong resistance from 7300/7340 and today I will be a seller in this area with a 7375 stop. My only interest in buying the market is on a further dip lower to 7080/7130 with a 7045 tight stop.
September BUND
Unfortunately the Bund never hit any of my sell levels over the past few days before the market accelerated lower yesterday afternoon. I am still flat and today I will now lower my sell level to 162.25/162.65 with a 163.05 stop. I still do not want to be long the Bund at this time.
Gold Rolling Contract
No change as I am still a buyer of Gold on any dip lower to 1205/1213 with the same 1198 stop. With sentiment at such extreme levels I am patiently waiting for the market to move higher.
Silver Rolling Contract
No change as I am still long the market at 15.48 with the same 15.60 T/P level. I will continue to look to add to my existing long position on any further dip lower to 15.10 with the same 14.90 stop. If my second buy level is hit I will then lower my T/P level to 15.45. Again if any of the above levels are hit I will be back with a new update for my Platinum Members.
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