UK Prime Minister Theresa May’s demand on Friday that EU leaders treat the UK – and its Chequers proposals – with more respect, saw a large move lower in the Pound on Friday afternoon. Sterling took over centre stage from the mid-week ‘’buy the fact’’ response to Monday’s US-China tariffs news. The 1.5% loss for GBP/USD in the wake of Thursday’s failed EU leaders meetings in Salzburg and aggravated by UK PM May’s admission that Brexit talks with the EU were at an ‘’impasse’’, dragged the DXY Dollar Index back into a 94 handle and seemingly had some contagion impact on risk sentiment more broadly. US stocks ended in negative territory, not helped by news that the US administration had prepared a letter for President Trump to sign by way of an Executive Order, instigating an anti-trust probe into various social media companies.
To mark my 1675th issue of TraderNoble Daily Commentary I am offering a special 2 year rate of Euro 2750 for my Platinum Service which includes 1 to 4 updated emails throughout the trading day To demonstrate this value, a monthly subscription over the same period would cost 4440 euro in total This offer represents a 38% discount and is open to both new and existing members. If anyone is interested in this offer can you please email me on bryan@tradernoblecom for details
For anyone following my Platinum Service it made 85 points on Friday and is now ahead by 1032 points for September, having made 599 points in August, 1074 points in July, 994 points in June, 1927 points in May, 1657 points in April, 1760 points in March, 2256 points in February, and 879 points in January. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
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Currencies
Sterling’s 11.9% weight in the DXY index meant that its 1.45% fall on Friday contributed 0.17% to the DXY’s overall gain of 0.33%. Additional contributions came largely from the 0.24% fall-back in EUR/USD after earlier almost tagging 1.18 (high of 1.1798, NY close 1.1749) and SEK (-0.58%). Nothing else was much moved over the 24 hours though the NY close, AUD ending -0.03% and NZD +0.03%:
On the week, DXY is still 0.74% lower, testament to the risk-positive ‘’buy the fact’’ rally that followed confirmation on Monday that Trump was proceeding with tariffs on $200bn of Chinese goods at an initial rate of 10% but slated to rise to 25% from January 1st 2019. SEK was the best performer as markets pre-position for Q4 Riksbank tightening (note NOK was still +1.3% higher on the week even after the sharp post-Norges Bank rate rise sell-off) while AUD and NZD both ended close to 2% higher.
Both AUD and NZD have opened almost half a per cent lower this morning on the weekend news that China has cancelled trade talks with the US. This really should not have come as any great surprise after last week’s events, and I suspect this is a dip to be bought back later today.
Equities
A 2.5% gain for the Shanghai Composite Index on Friday brings its gain to the week to 4.3% and meaning it is now up on the month to date. As well as being another example of the ‘’buy the news’’ mentality that pervaded most risk markets following confirmation of the latest round of US tariffs on China, there is also an appreciation that China will take (and indeed already is) whatever fiscal and monetary measures are deemed necessary to ensure that its overall growth rate is not going to negatively impacted by whatever hit its export sector takes from the US-Sino trade. If necessary, this will be at the expense for now of efforts to tackle excessive leverage in the corporate sector.
The S&P was virtually flat on Friday with the Dow modestly up but NASDAQ lower as the big social media counters suffered on news of a possible anti-trust probe. All US Indices are still higher on the week. Nikkei gains on the week, of 3.3%, coincide with the renewed weakening trend in JPY and improved Emerging Market Asia risk sentiment.
Bonds:
The US curve bull-steepened on Friday with 10s flat at 3.06% but 2s down 3.5bps to 2.38%. Gilts and Bund yields were both lower, by 3bps and 1bp respectively. On the week, 10yr Treasuries are some 7bps higher (and the 2/10s curve 4.5bps steeper).
Commodities:
Base metals were all higher Friday, led by a 4.3% jump for Dr Copper and the LMEX index up a heady 3.6%. Coal and iron ore were quiet as was oil, while gold lost just less than 1%. On the week it has also base metals hogging the headlines with copper +8% and LMEX by 5%. . A bit of the heat came out of coal on the week, both types off just under 2% on the week. Oil was up ahead of OPEC weekend talks, WTI by 2.6% and Brent by 0.9%. Reports late Friday and on Saturday were suggesting possible agreement to lift output by up to 500,000 bpd but this would be merely to offset recent over-compliance by this amount relative to the target established just a few months ago.
Economic Data
Eurozone Sep Flash Manufacturing PMI 53.3 (54.5E, 54.6P)
Eurozone Sep Flash Services PMI 54.7 (54.4E, 54.4P0
Eurozone Sep Flash Composite PMI 54.2 (54.5E, 54.5P0
US Markit Manufacturing PMI 55.6 (55.0E, 54.7P
US Markit Services PMI 52.9 (55.0E, 54.8P)
US Markit Composite PMI 53.4 from 54.7
This morning on the Economic Front we have the German IFO Business Climate at 9.00 am. Next we have the Chicago Fed National Activity Index at 1.30 pm. Finally at 3.30 pm we have the Dallas Fed Manufacturing Activity Index.
This afternoon at 2.00 pm ECB President Dragi speaks in Brussels at the ECON meeting.
December S&P 500
Overnight the S&P finally traded lower to my 2924 buy level before rallying to my revised 2927 T/P level and I am now flat. With the FOMC Meeting taking place on Wednesday when another rate hike is priced in, I would expect any sell-off for the early part of this week to be contained. Incredibly we got our 14th consecutive Hindenburg Omen on Friday which makes it 16 in total since last month. This is a sequence that I have never seen before and is a worry. Remember none of the market crashes since 1986 have happened without a registered H.O. on the clock. I am not saying that a crash is close at hand but we have to be wary. Today I will again look to buy the S&P on any dip lower to 2909/2917 with a 2902 stop. My only interest in selling the S&P is still on a rally higher to 2952/2959 with the same 2967 stop.
EUR/USD
In the last hour the Euro traded lower to my initial 1.1725 buy level. I am still long and I will now raise my stop on this position to 1.1690. I will also lower my T/P level on this trade to 1.1745 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
December Dollar Index
Shortly after I posted on Friday the Dollar traded higher to my 93.70 T/P level on my 93.55 long position and I am now flat. Today I will again look to buy the Dollar on any dip lower to 93.15/93.55 with a 92.80 stop.
December DAX
No change as I am still a small buyer on any dip lower to 12200/12280 with the same 12140 stop. I still do not want to be short the market at this time.
December FTSE
The aggressive sell-off in Sterling on Friday afternoon saw a large move higher in the FTSE. I am still flat and today I will now raise my buy level to 7350/7390 with a 7315 tight stop.
Dow Rolling Contract
Overnight the Dow just missed my 26420/26580 buy range and I am still flat. Today I will leave my buy range unchanged with the same 26350 stop. Meanwhile I will leave my sell level also unchanged from 26960/27120 with a 27190 stop.
December NASDAQ
Last night on the re-open of the Futures Market the NASDAQ hit my 7536 buy level before selling off some more to the bottom of my buy range at 7510 for a now average long position of 7523. I will leave my stop unchanged at 7465 while lowering my T/P level to 7545. If any of the above levels are hit I will be back with a new update form my Platinum Members.
December BUND
No change as I am still a buyer on any dip lower to 158.10/158.50 with a 157.80 higher stop.
Gold Rolling Contract
My Gold plan worked well with the market trading lower to my 1194 buy level before rallying to a rebound high at 1201.50. I used this rally higher to cover this position at my revised 1198 T/P level and I am now flat. Today I will again look to buy the market on any dip lower to 1178/1186 with a 1171 stop.
Silver Rolling Contract
Shortly after I posted on Friday Silver traded lower to my 14.30 buy level. I am still long with a now higher 13.75 stop.
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