Back to positive risk sentiment, aided by both China and the US making noises suggesting the doors are open to resumption of trade talks even if neither side is yet quite ready to walk through them. Alongside, the failure of USD//CNY to hold yesterday morning’s gains up though 6.70 and firmer Asia Emerging Market currencies in general, allows AUD/USD to creep back onto a 0.74 handle. US bond yields are little changed, still near 2.85% at 10 years. A 30 year Treasury bond auction last night was easily taken down (the long bond yield is off 0.6bp). The S&P500 and the Dow have both closed with gains of 0.9%, once again let by the IT sector and meaning the NASDAQ is up 1.4%. Remember US Q2 corporate earnings season kicks off in earnest today with JP Morgan, CitiiGroup and Wells Fargo all reporting, so that will likely be a big influence on how Indices fare into the weekend.
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 made 15 points yesterday and is now ahead by 426 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
I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notifications
After trade tariff tensions ratcheted sharply higher on Tuesday’s announcement that Trump had ordered his US Trade Representative to issue a list of $200bn worth of additional Chinese goods on which 10% tariffs could be applied, yesterday a spokesman for the Chinese Ministry of Commerce said China would take ‘’necessary’’ steps to defend its interests but did not explicitly say it would respond with equivalent measures while China’s Vice Minister of Commerce said ‘’we should sit down and try to find a solution to this trade problem’’.
Yesterday we heard from US Treasury Secretary Steve Mnuchin who told the US House Financial Services Committee that the US was ‘’available’’ for negotiations, while stressing the need for China to made structural changes. Meanwhile in Europe, President Trump has been railing against Europe’s contribution to the NATO defence budget (he wants European countries there to be spending 4% of GDP on defence not 2%) but has not as yet upped the rhetoric on trade, in particular his earlier threat to impose tariffs of 20% on 25% on car imports to the US.
Yesterday’s key economic release, June US CPI, came in slightly on the low side as regards headline inflation, printing 0.1% against the 0.2% expected, while core printed 0.2% as expected but only 0.16% unrounded. Nevertheless headline CPI inflation is now 2.9% up from 2.8% in May and core (ex-food and energy) 2.3% up from 2.2%. Softness in hotel and utility prices accounted for much of the downside surprise.
As for washing machines, which I have been talking about this week as showing the full impact of the tariffs announced last December, annual inflation here is now running at 20%. A reminder of how US import tariffs are already hurting US consumers and will be doing so on a much larger scale as a result first of the tariffs on $34bn (rising to $50bn) of Chinese imports and then $200bn. I still remain highly sceptical the latter at least will end up being implemented, in which case the tariffs on $34bn/$50bn of Chinese imports will likely end up getting lifted as well. That prospect is however many weeks away at best. In the meantime watch Monday’s China activity readings for June to be published early Monday morning as these could be the next influence on the Chinese Yuan, and with that broader Asia FX and the AUD.
Fed chair Jay Powell has been out saying that ‘’The economy’’ in a really good place, while acknowledging the risk posed by escalating trade disputes. Should those disputes result in ‘’high tariffs on a lot of products and a lot of traded goods and services’’ that ‘’could be a negative for our economy’’, he said. We have had the Fed’s Harker and Mester both out suggesting the Fed could rise rates two more times this year.
G10 FX moves in the last 24 hours are wholly consistent with the better risk tone, AUD, CAD, NZD topping the leader board in that order (AUD +0.56% to 0.7407). The Japanese Yen and Swiss Francs are near the bottom (USD/JPY up another 0.45% in the last 24 hours to 112.75, it’s highest level since 10th January).
As for Brexit, the government formally released its white paper on the future UK relationship with the European Union, in which it sets out plans for an ‘’association agreement’’ of the kind recently agreed between Brussels and the Ukraine. We need to get across that (it’s still early here) but confirms plans for a de facto continuation of single market and Customs Union membership for the goods and agriculture sectors while in essence leaving the fate of services (80%) to be determined. Note that the paper also includes a suggestion for an additional 12-18 month transitional period on top of the existing, provisionally agreed, period through the end of 2020. So Brexit does not practically take effect before 2022 on this basis. Hence the description of some hard Brexiteers on May’s proposal as the ‘’Hotel California’’ option. You can check out any time you like, but you can never leave.
This morning on the Economic Front we have no data of note due form either the UK or the Euro-Zone. At 3.00 pm we have the University of Michigan Consumer Sentiment at 3.00 pm and this is followed at 4.00 pm by the Fed releasing its Monetary Policy Report to Congress.
Finally at 5.30 pm the Fed’s Bostic is speaking in Virginia.
September S&P 500
As I have been saying for most of the past few years you just cannot stay short any of the US Stock Indices for any length of time as the buy the dip continues to kill any short positions. This scenario will continue to be the case until we break and close below both the 50 and 200 Day Moving Averages which have held the market for most of the past 9 years when the S&P bottomed. This rally only has to last one more month to be the longest bull market in US history. In my opinion it is only a matter of time before we break the old January 26th 2017 high at 2878. Unfortunately the S&P missed my buy level yesterday and I am still flat. Today I will now raise my buy level to 2786/2794 with a 2779 stop which is just below yesterday’s low print. I no longer want to be short the S&P at this time especially heading into another weekend.
EUR/USD
It took a while but finally the Euro traded higher to my 1.1695 T/P level on my 1.1680 long position and I am now flat. The Euro has good support from 1.1540/1.1590 and today I will be a buyer on any dip to this area with a 1.1495 stop. I will also be a small seller on any rally higher to 1.1730/1.1770 with a tight 1.1805 stop.
September Dollar Index
Again the Dollar just missed my buy range before trading higher and I am still flat. I will now raise my buy level to 93.80/94.25 with a 93.45 stop. I still don not want to be short the Dollar at this time.
September DAX
Frustratingly the DAX just missed my 12370 buy level by 20 points before rallying to a high so far this morning at 12550 and I am still flat. Thankfully we had no sell levels yesterday for the DAX. Today I will now raise my buy level to 12400/12470 with a 12340 stop.
September FTSE
The FTSE also just missed my buy level before having a strong rally and I am still flat. Today I will now raise my buy level to 7550/7590 with a 7505 stop.
Dow Rolling Contract
An incredible turnaround in the Dow over the past 10 days with every dip being bought aggressively as the market again tests the 25000 initial resistance level. Despite the 1000 point rally over the past week the Dow continues to underperform both the NASDAQ and S&P. I am still flat the Dow and today I will now raise my buy level to 24680/24840 with a 24610 stop.
September NASDAQ
The NASDAQ traded higher to my 7360 sell level late yesterday. Subsequently I emailed my Platinum Members to only add to this position on any further move higher to 7410 which was filled overnight for a now average short position of 7385. I am not comfortable in staying short the market and I will now raise my T/P level on this position to 7380 while leaving my stop unchanged at a tight 7430. If any of the above levels are hit I will be back with a new update for my Platinum Members.
September BUND
The BUND continues to trade sideways in a narrow range at elevated prices. I am still flat and I am not going to chasing this market lower and I will therefore leave my sell level unchanged from 163.10/163.40 with the same 163.75 stop.
Gold Rolling Contract
No change as my only interest in buying Gold is on a dip lower to 1225/1233 with a higher 1219 stop.
Silver Rolling Contract
No change as I am still long Silver at 16.10 with the same 16.25 T/P level and 15.45 stop. I will continue to look to add to this position at 15.70 and if any of the above levels are hit I will be back with an update for my Platinum Members.
Recent Comments