A lot of the attention yesterday remained centred on the commodity space with Oil prices down another 1%, Brent crude at $39.70, down 0.97%. Not surprising then that the Oil-linked currencies were mostly sold lower including the Canadian Dollar which closed weaker by 0.5% , while the Norwegian kroner was by 0.4% lower, although the Russian rouble was steadier. OPEC announced that its Crude Oil production was at a three year high in November as it presses on with high levels of output to further pressure the US shale industry, not to mention the unit returns it’s earning in the meantime
For anybody following my New Platinum Service it made 65 points yesterday and is now ahead by 775 points for December. The previous six months saw gains of 1510. 1600, 2833, 2195, 1810 and 3045 points respectively. If anyone is interested in the Platinum Service please email me on bryan@tradernoble.com for details.
The AUD is held on to most of the gains that quickly followed after yet another super-sized Australian Employment report, even though most of the rise reflected sample rotation rather than a further surge in employment in the matched sample. Even so, there is no denying that Unemployment has surprised on the low side consistently this year despite the chill winds from continuing pressure in the resources base the economy is held up a lot better than feared for forecast.
Elsewhere in the commodity space past 24 hours, it’s been mixed-tonegative commodity fundamental news for the Aussie Dollar with Iron ore back down again to $38.52, a new cyclical low, more than countering yesterday’s rise, while LME copper prices rose 0.22% despite some USD resilience while Gold eased 0.44%, although Gold has rebounded this morning.
After rising in the wake of the RBNZ rate cut and steady rate outlook yesterday, the NZD/USD held on to its gains overnight. The RBNZ will not be pleased with the currency’s response making clear yesterday its displeasure currency at current levels believing/hoping the NZD will weaken to help balance the economy.
The USD strengthened against a softer Euro, while the Sterling experienced some volatility around the Bank of England’s meeting. But the Bank stuck closely to its script, saying low oil prices and subdued wage growth would keep a lid on inflation, limiting any urgency to raise rates. Having traded a wide range around the meeting, the GBP/USD has returned to trade at 1.5150.
This morning on the economic front we have BoE/GIK Inflation forecasts for the next 12 months. At 1.30 pm we have US Retail Sales and PPI. Finally at 3.00 pm we have Business Inventories and the very important University of Michigan Consumer Sentiment.
Markets have the potential to be volatile on the re-open on Sunday night as the key Chinese activity numbers for November are being released tomorrow namely, Retail Sales, Industrial Production and Fixed Asset Investment.
December S&P 500
The S&P had another wild trading session yesterday but unfortunately the S&P just missed my 2042 buy level by 1.5 Handles before having a nice 24 Handle rally only to get hit again in the last hour of trading and I am still flat. Remember with the Contract Expiration next Friday whatever low is put in in the Thursday/Friday in the week before this Expiration tends to be the low. Yesterday’s economic data was again on the weak size and even though I expect the Fed to hike next week I still think this is the wrong thing to do especially with the ISM data back in contraction with its 48.6 print last week. Interestingly the last time the ISM data fell below 50 the Fed introduced QE 3 10 days later. Today I will leave my buy level unchanged at 2036/2042 with a 2031 stop. Again if I am taken long and subsequently stopped out of this position I will use my 5 Handle rule to go long again with a stop below whatever new low is printed.
EUR/USD
On what was a very quiet 24 hours for Currency trading the Euro traded lower to my 1.0925 buy level with a 1.0924 low I covered this position for a small gain at 1.0945 as I wanted to book some profit yesterday and I am now flat. Today I will again look to buy the Euro on any dip lower to 1.0870/1.0910 with a 1.0840 stop. I still do not want to be short the Euro at this time.
March Dollar Index
I have now rolled to the March Contract which trades with a small 5 point premium to the December/Cash market. Today I will look to go short on any rally higher to 98.40/98.70 with a 99.10 stop.
December DAX
I am still reluctant to buy the DAX despite its near 900 point fall since last Thursday. For the DAX to have such a violent move lower just shows the number of trapped long positions above the market. Obviously the strong Euro is not helping either and this is what makes next week’s FOMC Meeting so interesting. The DAX never came close to my buy level yesterday and today I will raise my buy level slightly to 10430/10490 in small size with a 10380 stop. Despite the negative price action I do not want to be short the DAX at this time.
December FTSE
The FTSE plan finally worked out last yesterday with the market trading lower to my 6075 buy level before following the spike higher in the S&P which enabled me to cover this position at my revised 6105 T/P level and I am now flat. The FTSE is still trading at the bottom of both its Daily Bollinger Band and Williams Index and today I will again look to buy the market from 6035/6065 with a 6015 stop. Given how oversold the FTSE is and despite the awful price action I still do not want to be short the market at this time.
Dow Rolling Contract
Unfortunately the Dow just missed my 17430 buy level by less than 30 points after I posted yesterday before at one stage having a nice 280 point rally and I am still flat. The McClellan Oscillator improved slightly but is still very negative with a -160 closing print. The fact that we have the FOMC Meeting on Wednesday and the Contract Expiration on Friday coupled with the weaker Dollar I do not want to be short the Dow at this time. For these reasons I will raise my buy level to 17430/17500 with a 17395 stop which is just below last Wednesday’s low print.
March BUND
The BUND plan worked well yesterday as shortly after I posted the BUND traded higher to my 158.90 sell level before having a nice 45 point sell-off which enabled me to cover this position at my revised 158.75 T/P level and I am now flat. Today with the Equity markets beginning to sell-off I will look to go short on any further rally higher to 159.10/159.40 with a 159.65 stop.
Gold Rolling Contract
I am still flat Gold which came close overnight to my buy level before having a $8 rally. I must say I am very disappointed with the price action in Gold which is getting no bid from either the weaker stock markets, the weaker Dollar or the increase in terrorism. For these reasons I will lower my buy level to 1048/1056 with a 1039 stop. Remember Gold has large support from 1040/1060 and a break and close below 1040 could well see an accelerated move lower to at least 1000.
Silver Rolling Contract
No change as I am still long at 14.40 with the same 13.90 stop.
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