The Euro-Zone manufacturing PMI data came in weak but not as low as feared in August. The main index remains well in contraction territory at 46.3 still suggesting that the Euro-Zone is still in a mild recession for Q3.This follows the weaker than expected PMI from China suggesting her economy is decelerating not accelerating. Bullard the Fed St Louis President who is not a voting member this year said in a CNBC interview that the economy had improved since the Fed last met and that the FOMC Minutes released on Wednesday were a bit stale and that the market had overestimated the chance of more Q3. Against this, Chicago-Fed Charles Evans was in China yesterday saying that policy easing would help economies including China. Samaras and Merkel are meeting later today and the markets were not helped from the joint statement from Merkel and Hollande saying that they have made no promises in response to the call from Samaras looking for more time rather than more money. Later this morning we have UK GDP and Index of Services followed at 1.30pm by Durable Goods Orders from the US.
Sept S&P 500
The S&P worked really well and I was able to take profit at 1404 on my 1417 short sale and I am now flat. Below, the market still has an open gap from 1362/1376 going back to the August Payroll Nos and I will be a large buyer if we do manage to trade into this Gap area against a 1360 stop. Today the market is difficult to call here. I will be a seller from 1407/1411 with a 1414 stop or I will be a small buyer from 1389/1393 with a 1385 stop. Remember September is looming and this historically is the weakest month of the year for equity markets. The market is still feeling the effects of the Key Day Reversal that it had on Tuesday.
EURO/USD
Amazingly the Euro is not following the Equity markets lower and as long as we stay above the 1.2450 major support level the Euro is bullish. On a bigger picture the next big resistance is the 1.2750 level which the market has rejected 4 times over the last last few months and a closing break over this level will be very bullish. Today I will look to go long the Euro from 1.2470/1.251 with a 1.2450 stop. If I am taken long I will look to take profit in front of 1.2600. As I said I do not want to be short the Euro at this time.
Sept DAX
The Dax just missed my 7060 sell level after I posted yesterday and then the market traded sharply lower. Just Like the S&P last Tuesday, the Dax had a major key day reversal yesterday. It made a new high at 7113 above the 7100 high on Wednesday and then made a new low at 6923 well below the 7005 low made on Wednesday. It is very important to respect this reversal and today I will look to go short from 6960/7000 with a stop at 7020. Again, given the volatility in the Dax I am only trading in smaller size with a larger stop but the direction is for a lower Dax.
USD/JPY
No change I still want to buy from 7820/7840 with a 7790 stop.
USD/GBP
This is a currency pair which I have not traded for a while. The Cable, as this pair is known, has had a large rally over the last number of weeks and we are now at the top of the Bollinger Band and the Williams Index has started to point down. Today I want to go short in small from 1.5860/1.5890 with a stop above yesterdays high at 1.5910. If I am taken short I will look to take profit from 1.5770/1.5800.
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