Geopolitics took a backseat last night with Trump’s Wall Street Journal interview dominating market moves. Trump stated the US Dollar is too strong and that he likes a low-Interest Rate policy. That saw the US Dollar immediately gap lower along with US Bond Yields. Equities ended the day down caught between continuing geopolitical concerns and the beginning of the profit reporting season. Trump in a WSJ interview said: “I think our dollar is getting too strong, and partially that’s my fault because people have confidence in me. But that’s hurting — that will hurt ultimately,” “It’s very, very hard to compete when you have a strong dollar and other countries are devaluing their currency.” Those comments sent the US Dollar into a dive, causing it to gap lower by 0.6% with the Bloomberg DXY now at 100.12 – its lowest level since 30 March 2017. Other currencies correspondingly surged. The Euro hit 1.0666 up 0.6%, the Yen up 0.5% and now sitting at 109.00 – its best since mid-November. The Australian Dollar also got into the action, launching to 0.7522 and up 0.3% on the day. However overnight after the much higher Employment data the AUD rose further and is currently trading at 0.7600.
To mark my 1300th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2750 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 can you please email me on firstname.lastname@example.org for details.
For anyone following my Platinum Service it made 86 points yesterday and is now ahead by 677 points for April, having made 1335 points in March, 1481 in February and 1734 in January. The previous seven months saw gains of 1351, 1971, 1582, 1142, 1782, 1682 and 2550 points respectively. Since I started this new Platinum Service in June 2015 it has averaged a monthly gain of over 1750 points.
Trump has also become a fan of low Interest Rates: “I do like a low-interest rate policy, I must be honest with you”. “As soon as [rates] go up, your stock market is going to go way down, most likely”. Those comments saw US Treasury yields gap 4.6bps lower and are now down 5.4bps on the day to 2.24% (lowest since late November). The real yield component bore the brunt of that repricing with the real yield now at 0.32%, while the breakevens rose to 1.92%.
On the next Fed chair, Trump implied Yellen was still a contender stating “I like her, I respect” and that “it’s very early”. Treasury secretary Mnuchin also said he was “very close” to nominating a Vice Chair of supervision to the Fed as well as a community banker position though no names were put forward. While Trump was talking down the dollar and interest rates, the Fed’s Kaplan (voter, hawk) said earlier in the day that the Fed’s plan to start shrinking the balance sheet by the end of the year does not change his view on rates and that he still sees three rate hikes this year as a “baseline”.
While geopolitics played a backseat to market moves there were some important developments. On North Korea, Trump and President Xi had a phone hook up with Trump tweeting “Had a very good call last night with the President of China”. According to Chinese media, President Xi stressed resolving “problems through peaceful means” and that China was committed to the “denuclearisation of the peninsula”. There are some fears that North Korea is preparing to conduct a nuclear or missile test to coincide with the anniversary of Sim Il Sung’s birthday or the army’s founding day on April 25. The US also appears to have made a concession to China with Trump also stating China is “not currency manipulators” and that China hasn’t manipulated its currency for months. This marks a continuing toning down of anti-trade rhetoric.
On Syria, US Secretary of State Tillerson met Russian officials and Russia said it was ready to restore an accord with the US in Syria. As for commodities, iron ore continues to sharp falls down 8.5% to $68 a tonne. In contrast coking coal continues to hold at elevated levels down just 0.5% to $265 a tonne. Oil prices fell 0.8% and are currently at $52.95 (WTI) and $55.70 (Brent).
This morning on the economic front we already had the release of the final German CPI which came in as expected with a +0.2% print. At 1.30 pm we have US PPI, Bloomberg Consumer Comfort Index and the Weekly Jobless Claims. Finally at 3.00 pm we have the University of Michigan Consumer Sentiment Index.
Tomorrow (Friday) is a public holiday in Australia and NZ, as well as the US, Canada, UK, and Germany. The US Government is still operating and the US releases Retail Sales and CPI figures on Friday. Japan also has Industrial Production figures while China has Monetary Statistics sometime during the day and is releasing GDP figures on Monday.
June S&P 500
Any member who is not on my Platinum Service should seriously thing about switching especially with the updated emails which are a key factor for this service. Yesterday at 2.00 pm after the S&P had traded lower to my 2346 initial buy level I emailed my Platinum Members to exit this position at 2347 (a price level which held for the following 20 minutes) and to re-buy the market on any dip below 2340. I bought the market at 2339 and in keeping with my theme of banking points when available for the least amount of risk I covered this position at 2341.50 before the market subsequently rallied back above 2346 only to get hit again into the Chicago close. Overnight the S&P continued lower to a 2334.50 low print before rallying again back above 2342. I am still flat the S&P and today I will continue with my strategy of buying the dip which has worked very well all month. Today my buy level will run from 2327/2333 with a 2322 stop. Again I will be an aggressive buyer on any subsequent dip lower to 2310/2316 with a 2305 stop. Given the fact that this is a long weekend I still do not want to be short the market at this time.
My Euro plan worked well yesterday with the Euro hitting my 1.0590 buy level before rallying strongly on Trump’s Wall Street Journal interview. Unfortunately as I had a dinner appointment I covered this long position at 1.0601 which was only a few minutes before Trump’s interview hit the wires. It is quiet clear that no country (apart from Germany) wants a strong currency at this time. With the Euro closing back above the key 1.0610/1.0640 support level, today I will again look to buy the Euro on any dip lower to 1.0590/1.0620 with a 1.0555 stop. I have no doubt that over time the Euro will appreciate as Trump is determined to weaken the US Dollar.
June Dollar Index
Over the past two weeks the Dollar Index has rallied strongly off its 98.78 March 27 low print to Monday’s 101.35 high print before selling off aggressively over the past 36 hours. I am still flat the Dollar and my own view that following January’s rare Downside Key Month Reversal that it is only a matter of time before the Dollar weakens further. Today I will now lower my sell level to 100.65/100.95 with a 101.30 stop.
My DAX plan worked well with the market trading lower to my 12150 buy level before rallying. This rally enabled me to cover this position at my revised 12170 T/P level as so many of my positions hit at the same time and I wanted to reduce my risk exposure. I am still flat the DAX which is selling off this morning on the back of the stronger Euro. Today I will again look to buy the DAX on any dip lower to 12030/12080 with a 11970 stop. Despite the negative price action I still do not want to be short the market ahead of a Long Weekend.
Following Tuesday’s reversal higher which continued after I posted yesterday morning, the FTSE subsequently sold off yesterday afternoon with the market hitting my 7295 buy level. I am still long and I will now lower my stop slightly to 7245. If I am stopped out of this position I will be a more aggressive buyer on any further dip lower to 7175/7205 with a 7145 stop. Remember the 7180 pivot point is key to the next move in the FTSE as mentioned in my previous commentaries over the last week.
Dow Rolling Contract
My Dow plan also worked well with the market trading lower to my 20590 buy level before rallying back above 20630. Again as so many of my markets hit at the same time I emailed my Platinum Members to exit this position at 20610 and I am still flat. The key level to watch for the Dow is last month’s 20412 low print as a break and close below here will be bearish. Today my only interest in buying the Dow is on a dip lower to 20440/20500 with a 20375 stop. Again ahead of a Long Weekend I do not want to be short the Dow at this time.
This morning the Bund traded higher to my 163.56 sell level. I am still short and I will now lower my stop on this position to 163.90 as I do not want to risk too many points on this trade. I will now raise my T/P level on this trade to 163.25 especially with the market closed tomorrow and Monday.
Gold Rolling Contract
The break of the previous 1260/1265 resistance level saw Gold move to an overnight high at 1288.50. However the Daily Sentiment Index quickly jumped to 80% yesterday which is the highest level of optimism since the July 3, 2016 high at 83%, when Gold rose to $1375. Gold has strong resistance from 1291/1300 and with the market severely overbought and trading outside the top of its Daily Bollinger Band it is difficult to be long. Given all of the above I am going to leave my buy level unchanged from 1261/1267 with a 1255 higher stop. Ahead of what could be a military weekend it is not worth the risk in trying to short Gold at these levels.
Silver Rolling Contract
Silver has lagged the upward price movement in Gold since last Friday’s Downside Key Day Reversal. However this morning Silver is trading above last Friday’s 18.51 high which in theory negates this KDR. With the Large Speculators holding their largest net-long position in twelve years as mentioned in yesterday’s commentary I do not want to be long Silver at this time. I do not see a good risk/reward in buying Silver here especially as we have made a lot of points over the past 12 months in this contract and again given the long weekend I will stay on the sidelines and take another look on Tuesday. Support for Silver remains at 17.50/17.70 and below that at 17.15/17.25 while the 19.05 area is strong resistance.
Please note that with most markets closed until next Tuesday there will no Daily Commentary tomorrow or on Monday. However if anything dramatic happens I will be back with an update(or few) for my Platinum Members over these closed trading days. Finally I would like to wish all my members a Happy Easter and to thank you for your continued support.