It was an eventful news day for the AUD yesterday, even if the currency was little changed, and is not breaking new ground this morning, with the S&P Ratings Agency yesterday changing the outlook on Australia’s AAA rating from stable to negative. They cited fiscal outlook concerns, that fiscal consolidation could be further postponed. The agency also cited downside risks to the revenue forecasts in the Budget from their own forecasts of a lower iron ore price and the risk of persistent low price and wage inflation.
To mark my 1100th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2500 for 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 please email me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it made 170 points yesterday and is now ahead by 350 points for July having made 2550 points in June. The previous three months saw gains of 1532, 2175 and 2265 points respectively. Since I started this service last June it has averaged a monthly gain of over 2200 points.
The AUD/USD dipped from what at the time was a mini rally in place up to 0.7535/40, quickly reversing by over a cent, that was just as quickly snuffed out by renewed buying up through 0.75 again. Of course, the announcement did not come out of the blue, the market waiting for a statement from S&P after the election.
The AUD has settled back not far below 0.75 this morning amid weakness yesterday in oil prices (WTI and Brent both closing down over 4%), weighing on US energy stocks despite EIA measures of inventories falling in line with expectations but much less than the API expected that bolstered expectations for a larger drawdown. Swimming against a softer commodity-induced tide is the NZD benefiting from concerns raised yesterday by RBNZ Deputy Governor Spencer on house prices, suggesting less risk of lower rates. The yen and the USD remain bid.
Sterling is trading near its lows of recent days; the Conservative Party narrowing its leadership candidates to two, Theresa May and Andrea Leadsom. It has been a similar soft story for the Euro, Germany reporting weaker than expected May industrial production and the EU Commission threatening fines for Spain and Portugal for excessive deficits, to be discussed at next week’s EU Finance Minister’s meeting. For what its worth, the private sector US ADP employment report for June ahead of Non-Farm Payrolls this afternoon was a little stronger than expected while Weekly Jobless Claims into the first week of July remained low at 254K.
This morning on the economic front we have the German Current Account which will be published at 8.00 am. Next we have the UK Trade Balance at 9.30. At 1.30 pm we have the hugely important US NFP data which will certainly attract the market’s full attention, with the employment component of Wednesday ISM Non-manufacturing report for June suggesting the number will be a little higher in underlying terms than in April/May when payrolls rose by a monthly average of 81K, but not significantly so. (The low 38K May result would have been around 35K higher but for the Verizon strike, the unwinding of which should be present in today’s Report.) The Non-manufacturing ISM read on employment was only marginally higher, and the US Help-Wanted index fell further, pointing to some uncertainty on the rate of job hiring in coming months, including in June. The market is expecting a rise in headline payrolls of 180K and an Unemployment rate of 4.8% after May’s 4.7% reading; that consensus payrolls growth is looking a tad ambitious. The market will also be keenly interested in earnings that are expected to have risen another 0.2% m/m, lifting annual growth from 2.5% to 2.7%. It is going to require a clearly strong report (and for the next month or two) to convince the market that a near term rate hike looks realistic.
September S&P 500
My S&P plan worked well with the S&P finally hitting my 2085 buy level before having a nice rally into the close. This rally enabled me to cover this position at 2088.50 as I had emailed my Platinum Members to cut this position in anticipation of both the Dow and FTSE hitting my buy ranges which they subsequently did. I am now flat and as usual I will stay flat until we get the release of the key NFP data at 1.30 pm. If the market again sells off following the announcement I will again look to buy the S&P on any dip lower to 2077/2083 with a 2069 stop. Again if I am taken long and subsequently stopped out of this trade I will be a more aggressive buyer in front of 2064 with a 2058 stop. I still do not want to be short the S&P at this time.
EUR/USD
No change as I am still a small buyer on any dip lower to 1.0960/1.1010 with a 1.0925 tight stop. My only interest in selling the Euro is still on a rally higher to 1.1170/1.1220 with the same 1.1260 stop.
September Dollar Index
No change as I am still a seller on any rally higher to 96.70/97.00 with a 97.35 stop.
September DAX
The Deutsche Bank news and the fall-out from ‘Brexit’ continues to weigh on the DAX. I am still flat and today I will leave my buy level unchanged at 9150/9220 with the same 9110 stop. I will now lower my sell level again to 9600/9660 with a 9720 stop.
September FTSE
Very late in yesterday’s trading session the FTSE traded lower to my 6450 buy level before having a nice rally overnight which enabled me to cover this position at my 6490 T/P level and I am now flat. We were due some luck in the FTSE especially as we were stopped out of our previous long positions near the low of the day. The FTSE continues to hold its key support at 6385 which is where the April high comes in and today I will again look to buy the market on any dip lower to 6390/6425 with a 6360 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
Just like the other equity Indices it took a while but finally the Dow hit my 17830 buy level with a 17815 low print before rallying as expected into the close ahead of today’s NFP data and this rally enabled me to cover my long position at my 17900 T/P level and I am now flat. Just like the S&P above I will stay flat the Dow until we get the Payrolls release. If the market sells off after the release I will again look to buy the Dow on any dip lower to 17750/17820 with a 17695 tight stop. I still do not want to be short the Dow at this time.
September BUND
After holding a short Bund position at 167.75 for a couple of days the market finally sold off to my 167.50 T/P level yesterday and I am now flat. I will continue with my strategy of selling the Bund with a tight stop as this insane negative Yield for the Bund cannot last. Today I will again be a seller on any rally higher to 167.90/168.20 with a 168.50 stop.
Gold Rolling Contract
No change as I am still a small buyer on any dip lower to 1330/1338 with a 1323 stop.
Silver Rolling Contract
Silver sold off as expected following the huge 5 day DSI reading at 94.5% bulls which was the highest reading since the May 2011 high at $51. I am still flat and today my only interest in buying Silver is still on a dip lower to 18.20/18.70 with a 17.60 stop.
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