The market still wants to own Dollars as it winds down into Christmas and the New Year period. On the currency front, the USD is still the pick of the bunch, the Bloomberg spot BBDXY Dollar Index closing up 0.28%. Faring less well have been the Australian Dollar – having tested and currently trading almost right on 0.72 – and Sterling, cable trading with a 1.22 handle, at 1.2265 this morning on what will invariably be a light day for trade. Also faring less well has been the Canadian Dollar in the wake of mixed news with a softer-than expected CPI but a perky Retail Sales report. USD/CAD did trade down to 1.3470 after earlier testing above 1.35, but is back trading almost right on the figure.
To mark my 1225th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2750 fro my Platinum Service which includes 1/4 updated emails throughout the trading day. This offer is open to both new and existing members and if anyone is interested can you please contact me on bryan@tradernoble.com for details.
Yesterday was only the second trading session in my five years of writing Tradernoble that none of my nine calls got triggered. My Platinum Service is up 1221 points for December having made 1971 points in November and 1582 points in October. The previous four months saw gains of 1142, 1782, 1682 and 2550 points respectively. Since I started my Platinum Service in June 2015 it has averaged a monthly gain of over 1900 points.
The US data set released yesterday was a mixed bag. While US Q3 GDP was revised up to an annualised 3.5% rate from 3.2% and core Durable Goods Orders were a little better than tipped in November (0.9% against 0.4% that was the consensus), the November Personal Income, Spending and PCE deflators report far from shot the lights out. Income growth was flat and consumer spending rose a tenth less than expected at 0.2%, down from 0.4%, though in lower than-expected inflation–adjusted terms, consumer spending managed the second month of a measly 0.1% rise.
In the wake of the US data, the Atlanta Fed’s GDPNow estimate for Q4 was shaded lower to 2.5% from 2.6%.
The PCE deflators were lower than expected, headline up 0.1%/1.4% (against consensus of 0.2%/1.5%) while the core PCE deflator was flat m/m, up 1.6% against 0.1%/1.7%. It did however seem to slow some small-scale selling of bonds, even if US Treasury yields are a little higher on net into the close of the session, 2s at 1.192% (+0.4bps) and 10s at 2.552% (+2.5bps). Fed funds futures are pricing for 60bps of rate hikes in total over the course of 2018, pricing in that the next rate hike might not occur until the May 3 meeting, where 14.8bps of hikes is priced for, that meeting the third of the year.
Commodity markets yesterday have seen oil higher, base metals mixed with copper up small, nickel down slightly, gold also off slightly, while iron ore was down $3.04/t to $76.15.
It was just announced earlier this morning that Deutsche Bank have agreed a $7.2bn settlement with US authorities.
This morning on the economic front we already had the release of German GFK Consumer Confidence which came in as expected with a 9.9 print. At 9.30 am we have UK GDP, Current Account Balance and Total Business Investment. Finally we have US New Home Sales and University of Michigan Consumer Sentiment at 3.00 pm.
March S&P 500
Unfortunately the S&P missed my 2248 buy level with a 2251.50 low print before rallying strongly overnight to sit at 2260 as I write this commentary and I am still flat. The S&P has good support from 2243/2248, strong support at 2235 and very strong support at 2215. As this is my last commentary until next Thursday with most European Markets closed until Wednesday. However the US market since the tragedy of 9/11 is not allowed to close for two consecutive working days and will re-open next Tuesday. Today I will again look to buy the S&P on any dip lower to 2246/2252 with a 2241 stop. Otherwise my only interest in buying the S&P in the event of major sell-off next week is from 2212/2219 with a 2206 stop. If the S&P does trade lower to my second buy level I will be an aggressive buyer in this area and I will send out an updated email to my Platinum Members in this case. Given the strong seasonality I still do not want to short the S&P at this time.
EUR/USD
The Euro briefly rallied to a 1.0499 high print on the weaker PCE defator data before selling off again into the New York close. Today I will leave my buy level unchanged at 1.0360/1.0400 with a 1.0325 stop. Otherwise I will stay flat until my Daily Commentary resumes after the Christmas break.
December Dollar Index
I am still flat the Dollar and today I will raise my sell level to 103.65/104.05 with a 104.35 stop. Given how overbought the Dollar is trading and the fact that the DSI is close to 96% bullish I do not want to be long the Dollar at this time.
March DAX
I am still flat the DAX which continues to trade in a very narrow range. I am going to stay flat until my return next Thursday as I do not want to get hit on a position over the Christmas break.
March FTSE
The FTSE Cash and Futures market closes at 12.30 pm today and re-opens next Wednesday. I am still flat the FTSE and I will also stay out of this market until next week. With Sterling again selling off it is difficult to be short the FTSE which continues to be a buy on dips.
Dow Rolling Contract
No change as I am still a seller on any rally higher to 20060/20120 with a 20170 stop. If the Dow rallies to my Macro sell level at 20280/20450 I will be back with an update to my Platinum Members, otherwise I will stay flat until my return on Thursday. Given the seasonality it is very difficult to be short the Dow but the fact that the market is so overbought on a Daily, Weekly and Monthly basis we may well see the Dow finally break 20,000 before selling off and reversing this move. Remember we still have three confirmed Hindenburg Omen’s on the clock on top of last week’s downside Key Day Reversal.
March BUND
Unfortunately the Bund just missed my 162.75 buy level with a 162.88 low print before rallying strongly and I am still flat. I am also going to stay flat the Bund until my return on Thursday. The European markets will be very quiet next week as we have no economic data of note due from either the Euro-Zone or the UK until the start of January.
Gold Rolling Contract
Given the extreme oversold nature of the Gold market I will leave my buy level unchanged at 1112/1122 with a 1105 stop. Remember as I mentioned yesterday if Gold does bottom in my buy range over the coming days it will be the 78.6% retracement of the rally from last December 2016 to July this year.
Silver Rolling Contract
No change as I am still long at an average rate of 16.08 with the same 15.35 stop. If I am stopped out of this trade I will be back with an update to my Platinum Members.
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