European and US Equities ended last week in positive territory with the mild positive tone to Friday’s session helping the S&P 500 move back into the black for 2016. In Currencies, the US Dollar had a mixed trading session making small losses against European Currencies while also gaining a little bit of ground against the AUD,JPY and GBP. Overall markets in general took a breather on Friday and now appear to be in wait and see mode. The US Dollar has been on a globally based rally for three weeks with last week’s gains primarily driven by a re-pricing of Fed hike expectations following the release of the FOMC April Minutes and Fed speakers who also reinforced the message that at least two rate hikes should be expected before the end of the year.
To mark my 1075th 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 for details.
For anyone following my Platinum Service it made 20 points on Friday and is now ahead by 1100 points for May having made 2175 points in April. The previous two months saw the same gain of 2265 points in both February and March after a record 3365 point gain in January. Since I started this service last June it has made over 25,000 points.
Core Bond Yields had a quiet end to the week with the 10 Year Treasury closing unchanged at 1.85% while in Europe the 10 Year Bund closed 1bp softer at 0.16%.
In Commodities, oil prices were a little bit softer with WTI and Brent closing down 1.2% and 0.3% respectively and that softness has continued overnight with WTI now trading under $48 at $47.80. Metal prices were mixed with Gold closing -0.25% lower while Silver closed 0.23% higher. Meanwhile Iron ore had a good day climbing 2.6% to finish the week practically unchanged at $54.89 and not a bad result considering the 5.8% loss recorded last Thursday.
CFTC data for the W/E 17 May shows overall net US Dollar speculative shorts were reduced once again, dropping to -56.34 from -82.54 previously. The reduction is consistent with US Dollar gains recorded over the period, but notably they do not include the impact from the April FOMC Minutes released last Wednesday. This would suggest that next week’s data is likely to show another reduction in net US Dollar short positions.
As for data releases, US April Existing Home Sales rose by 1.7% to 5.45m, marginally higher than the 5.4m expected. In Canada Retail Sales fell 1% in March, faster than the 0.6% drop pencilled in by economists. Core CPI for April printed at 2.2%yoy versus the 2.0% expected.
Unsurprisingly the G7 Summit of Finance Ministers and Central Bank chiefs concluded on Saturday without any new announcements along the lines of policy mix such as a coordinated Fiscal Stimulus strategy or structural reform. While the US and Japan, once again stated their difference of opinion on what constitutes an orderly or disorderly movement in a currency, officials agreed not to target currencies to boost growth and warned of the negative consequences from disorderly moves in exchange rates. The Global Finance leaders did unanimously agree that a UK departure from the EU would be bad for the European and World Economies. Lastly and perhaps preluding the widely expected Japan Fiscal Stimulus, both the US and Japan supported the need for fiscal spending.
This morning on the economic front we have German and Euro-Zone Manufacturing PMI at 8.30 am and 9.00 am respectively. This is followed at 2.45 pm by US Manufacturing PMI. Finally at 3.00 pm we have Euro-Zone Consumer Confidence.
Speaking wise, this morning the Fed’s Bullard is due to speak on the US economy in Beijing at 10.30 am while at 1.00 pm the San Francisco Fed President Williams is speaking in New York.
June S&P 500
Friday was one of the quietest trading sessions across all markets with only one of my trades getting executed. This of course was the S&P which traded higher to my 2053 sell level before eventually falling on the shooting incident near the White House which saw the market trade as low as 2045 before again rebounding into the close. As I wanted to book some profit for Friday I emailed my Platinum Members to cover this position at 2051 and I am now flat. This morning I will leave my buy level unchanged at 2030/2035 with a 2025 stop. Again if the market trades lower to my buy level and either I manage to take profit on this trade or I am subsequently stopped out of any long position I will be an aggressive buyer on any further dip lower to 2008/2014 with a 1999 stop. Remember this second buy level is where the 200 Day Moving Average comes in and I would expect an initial decent rally to develop from here before we trade lower. My only interest in selling the S&P is still on a rally higher to 2054 /2059 with a 2064 stop.
EUR/USD
Unfortunately the Euro just fell short of my 1.1170 buy level on Friday and I am still flat. Despite the market now re-pricing in two Fed rate hikes this year if the stock market continues to trade heavy and eventually breaks lower which I expect to happen then the Fed will not be hiking rates. If this scenario develops then we will see the US Dollar weaken again. Today I will raise my buy level to 1.1170/1.1200 with a 1.1135 stop.
June Dollar Index
No change as I am still short from last week at 95.30 with the same 95.70 stop.
June DAX
Despite the better than expected German PMI data just released the DAX is trading lower as the market again tests the key 9750/9800 support zone having just fallen short on Friday of my 9970 sell level and I am still flat. Today I will lower my sell level slightly to 9950/10000 with a 10040 stop. Given the negative price action I will also lower my buy level to 9680/9740 with a 9640 stop.
June FTSE
The FTSE continues to trade in a very narrow range and I am still flat. Today I will lower my buy level slightly to 6050/6080 with a 5995 stop.
Dow Rolling Contract
No change as I still look to buy the Dow on any dip lower to 17360/17420 with the same 17320 tight stop. If I am taken long and subsequently I am able to cover this position at a profit or I am stopped out of this trade I will be a more aggressive buyer in front of 17250 with a 17180 stop.
June BUND
The BUND has also traded in a very narrow range over the past few days and I am still flat. Today I will look to sell the market on any further rally higher to 164.45/164.75 with a 165.05 stop. I will also raise my buy level slightly to 163.10/163.40 with a 162.85 tight stop which is just below the 100 Day Moving Average.
Gold Rolling Contract
Gold continues to trade heavy as the market looks to test the key 1230 support level over the coming days. I am still flat Gold and today I will still look to buy the market on any dip lower to 1232/1239 with a 1225 tight stop.
Silver Rolling Contract
No change as I am still a buyer on any dip lower to 15.80/16.20 with a 15.40 stop.
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