It was a case of softer than expected readings on both sides of the Atlantic overnight, but in the wash up, the market was inclined to give more credence to the softer suite of US economy reports than for Europe’s. The Bloomberg spot dollar index in net terms is off by 0.61%, with major currencies, including the AUD making gains against the big dollar. In the wake of all the data, the AUD/USD has been trading up toward 0.78 again in late New York/ early Asia trade. The ANZAC currencies are not quite at the top of the pile this morning, but have made a good fist of it. In the background for the Aussie, iron ore prices rose again yesterday, as did LME copper, while the VIX is lower as US stocks closed higher.
The preliminary PMIs for France and Germany both missed expectations and March readings, initially seeing the Euro pull back to below 1.07, but this proved to be a buy area on the day. The pull back had analysts scratching their heads, the single currency economy appearing to slow despite the benefit of a lower currency and ultra-low/negative bond yields.
ECB Chief Economist Praet said in the aftermath that the Euro-zone economy was turning the corner (German consumer confidence was also resilient) and the market seemed to take some comfort from that, the EUR/USD rallying even in the lead up to the US data points. Other headlines from Europe ahead of the EU Finance Ministers meeting in Riga tonight have centred on talk of “Grimbo”, yet another catchphrase for Greece, this one a period of limbo for Greece, another update to Grexit and Graccident. Though far from the most market sensitive data, weaker-thanexpected US New Home Sales, an uptick in jobless claims and a pull-back in Kansas City Fed manufacturing played to the softer US growth thematic. US Treasury yields eased as did the US$.
This morning on the economic front we have German IFO Business Climate, IFO Current Assessment which are all due at 9.00 am. This is followed by Durable Goods Orders at 1.30 pm where the consensus is for a 0.6% rise compared to last month’s 1.4% fall.
June S&P 500
The S&P plan worked very well yesterday as just as I posted the S&P was trading at my 2089 buy level before having a nice rally which enabled me to cover this position at 2097. Subsequently the S&P rallied to my 2110 sell level before having a nice sell-off overnight which has enabled me to cover this position at 2104 and I am now flat. Today I will again be a small buyer on any further dip lower to 2096/2101 with a 2092 stop. With the market having a nice breakout to the upside yesterday I am reluctant to go short unless we spike higher to 2114/2119 where I will be a seller with a 2123 stop.
EUR/USD
Finally the upside break that I was looking for in the Euro happened just after I posted yesterday morning which enabled me to cover my long 1.0720 position at 1.0805. Subsequently the Euro traded higher to my 1.0830 sell level and after a nice sell-off overnight I have covered this position at 1.0790 and I am now flat. Today I will again be a small buyer on any further dip lower to 1.0740/1.0780 with a 1.0715 stop. I do not want to be short the Euro today as break and close over 1.0850 will be short-term bullish.
June US Dollar Index
My short 98.45 Dollar position worked out well yesterday as shortly after I posted the Dollar got hit hard which enabled me to cover this position at 97.50 and I am now flat. Today I will again be a seller on any rally higher to 97.90/98.30 with a 98.70 stop.
June DAX
The DAX plan also worked well yesterday as after lunch the DAX spiked lower to my 10720 buy level before having a nice rally which enabled me to cover this trade at 10790 and I am now flat. Today I will again be a buyer on any dip to 10700/10740 with a 10655 stop. Given how oversold the DAX is I do not want to be short the market at this time.
June FTSE
The FTSE plan also worked well yesterday as shortly after I posted the FTSE was trading at my 7015 sell level before having a nice sell-off which enabled me to cover this trade at 6985 and I am now flat. Today I will again look to go short on any further rally to 7050/7080 with a 7105 stop. With the UK General Election less than two weeks away I do not want to be long the FTSE at this time.
Dow Rolling Contract
The Dow plan also worked well as the strategy of selling rallies continues to reap rewards. Yesterday after I posted the Dow rallied to my 18030 sell level before having a nice sell-off soon after the US markets opened which enabled me to cover this position at 17960 and I am now flat. The market is opening lower this morning and today I will again look to go short on any move higher to 18090/18140 with a 18180 stop.
June BUND
No change as I am still a small seller on any further rally to 159.55.159.85 with a 160.25 stop which is just above last Tuesday’s high.
Gold Rolling Contract
No change as I am still long at 1191 with the same 1183 stop.
Silver Rolling Contract
No change as I am still long at 15.75 with the same 15.45 stop.
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