Euro-Zone GDP recorded no growth in June but nonetheless was close to expectations with the zero outcome and only just below the median 0.1% forecast. The Euro did not lose ground after the release, indeed it had a brief rally towards 1.3400 as there were fears of a negative number. Markets in any case were positioned for a soft GDP outcome after the earlier release of the German GDP data showed a contraction of 0.2% in Q2 whilst French GDP was flat. German 10-Year Bonds traded below 1.0% for the first time whilst the Euro weakened back to the 1.3365 level.
Meanwhile the Euro-Zone CPI was confirmed at -0.7% for the month which lowered the annual inflation rate to 0.4%. A low inflation outlook and GDP likely to rise just 0.7% for all of 2014 means the pressure is on the ECB to ensure their Targeted LTRO Programme (due to launch in September) helps to stimulate activity later this year.
US Economic data was also soft with Weekly Jobless Claims rising 21k to 311k versus 295k expected although the data is still consistent with further improvement in the labour market. The four-week moving average for Jobless Claims is at 296k so only a little higher than last week’s 294k which was an eight-year low.
Stock markets have gained despite the weak data after Russian President Putin said he would do everything in his power to end the conflict with Ukraine. US equity markets have closed 0.4% higher whilst European markets have averaged a 0.3% gain. Oil Prices fell 2% yesterday after Libya said it would re-open its largest export port soon whilst US Crude supplies rose for the first time in seven weeks.
This morning on the economic front we have UK GDP at 9.30 am. We have no data of note due from the Euro-Zone while at 1.30 pm we have US PPI and Existing Home Sales. At 2 pm we have the latest TIC flows and this is followed at 2.15 pm by US Industrial Production. Finally at 2.55 pm we have University of Michigan Consumer Confidence.
September S&P 500
The S&P traded in a very narrow range yesterday as the market waits for the ‘Nominal Expiration’ for the Options market just before the cash market closes this evening. It then traded up to my 1953 level before the close and I am still short and I will leave my stop the same at 1958. If I am stopped out of this position I will be a more aggressive seller in front of 1964 with a 1969 stop. My only interest in buying the S&P is still on a dip to 1937/1943 with a 1933 stop which is just below last Wednesday’s low.
Euro/USD
No change as I am still a buyer on any dip to 1.3320/1.3350 with the same 1.3295 stop. Again as long as the Euro can hold the 1.3280/1.3310 support I am still bullish but a break and close below 1.3280 should see an acceleration lower.
US Dollar Index
The Dollar finally traded down to my 81.45 buy level. I am still long and I will leave my stop the same at 80.95.
September DAX
The Dax traded in a very narrow range yesterday but is still trading over 350 points higher than the lows put in last Friday. Very late in the US trading session it traded up to my 9260 sell level. I am only short in small size and I will leave my stop the same at 9310. I will also be a small buyer on any dip to 9170/9200 with a 9145 stop.
September FTSE
The FTSE continues to trade higher and thankfully I have not been short this market. I am not going to chase it higher from here and I will leave my buy level the same at 6610/6640 with the same 6585 stop.
Dow Rolling Contract
The Dow is also surging ahead despite the extremely weak economic data and as I mentioned yesterday a market that will not weaken on bad news has to be respected. I was stopped out of my Wednesday short 16650 position late last night at 16720 and I am now flat. Today I will be a small buyer on any dip to 16620/16660 with a 16590 stop. Given that today is Nominal Expiration I do not want to be short the market at this time
September BUND
After I posted yesterday morning I was stopped out of my 149.80 short position for a small loss at 150.10. The Bund is now trading at the absurd rate of 1% and for this reason I went short again at 150.05. I will leave a 150.35 stop on this position.
Gold Rolling Contract
No change as I am still a small buyer at 1304/1310 with the same 1299 stop. A break and close over 1325 will be very positive in the short term.
Silver Rolling Contract
I am still long from last week at 19.90 with the same 19.45 stop as Silver continues to trade in a very narrow range.
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