Well, not a storm, but the Australian Dollar is riding higher after much stronger than expected GDP for the December Quarter, the surprise being not only the 0.6% Quarterly print but annual growth with an unexpected ‘3’ handle. The AUD immediately jumped to 0.7220 versus the US Dollar and that rally has continued overnight with the AUD now trading at 0.7325 which is its highest level of the year so far before this year’s elevated global volatility unfolded. Helping the recovering in the AUD was the rise in both Iron ore and Gold while Oil was little changed.
To mark my 1000th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2500 for my Platinum Daily Commentary 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 anybody following my Platinum Service it made 140 points yesterday and is now ahead by 210 points for March having made 2265 points in February and 3365 points in January. Since I started this service last June it has made over 20,500 points.
The Spot Bloomberg US Dollar Index has lost a little ground overnight, despite some supportive words from moderate Fed President John Williams speaking to a strong US economy script and a none-to-damaging Fed Beige Book that was released late yesterday. Data released in the past 24 hours was very much second tier with the UK Construction PMI at 54.2 in February and the US ADP Employment Report ahead of tomorrow’s Payrolls revealing no material change at 214K, up slightly from a revised 193K in January.
Elsewhere in the currency space, Sterling has had a better 24 hours, having previously being sold on ‘Brexit’ fears. The Bank of England Deputy Governor Cunliffe said he was not able to predict the impact of ‘Brexit’, clearly wanting to stay away from the politics ahead of the referendum but also not coming to any hasty judgements on the complexity of teasing out economic and market effects.
Speaking on the US economy, the usually moderate John Williams said the US economic outlook has not changed more than a fraction, that he sees no sign of fragility in the US economy, that ‘we don’t want to run a hot economy for too long’ and that the US is able to ‘power through’ headwinds from abroad. There is not too much concern in any of that. He also observed that he would be in favour of using forward guidance and more QE if needed to support the economy rather than negative Interest Rates. He declined to comment on the March Meeting but made the general point that the Fed is on the path to raising rates. US Bond Yields and stocks edged a little higher on these remarks.
Last night’s Fed Beige Book released ahead of this month’s FOMC Meeting pointed out that most Districts were growing in either ‘moderate’ or ‘modest’ rates, two Districts reported flat business conditions and, in this report, one district – Kansas City – reported a modest decline. In net terms, pretty much the same to marginally softer.
This morning European markets are opening higher following the late rally in the Dow and the ongoing rally in the Nikkei which closed up 1.3% at 16960 just above the key 16900 pivot point and now over 2000 points higher than last month’s spike low.
This morning on the economic front we have German, Euro-Zone and UK Markit Services PMI at 8.55 am, 9.00 am and 9.30 am respectively. At 10.00 am we have Euro-Zone Retail Sales. This is followed at 12.30 pm by US Challenger Jobs Cuts and at 1.30 pm we have the Weekly Jobless Claims and Non-Farm Productivity. Next we have US Markit Services PMI at 2.45 pm. Finally at 3.00 pm we have ISM Non-Manufacturing Composite and Factory Orders.
March S&P 500
Unfortunately the S&P missed my 1965 buy level with a 1966.25 low print before the S&P rallied strongly into the close. This rally continued overnight with the S&P hitting my 1986 sell level. Given the amount of key economic data to be released later I decided to cover this position this morning at 1981.50 and I am no flat. The strong finish to the US stock markets last night saw the McClellan Oscillator close at a very strong positive reading of +296. Remember any reading over +250 is overbought. However although I am on the look-out for a new sell-off given how overbought the market is I still expect the first ‘Open Gap’ from early January from 1994/2010 to at least get partially filled before we head lower. For these reasons I will look to sell the S&P again on any move higher to 1991/1997 with a 2002 stop. Again if I am taken short and subsequently stopped out of this position I will be a more aggressive seller in front of 2010 with a 2016 stop. I will also raise my buy level slightly to 1965/1970 with a 1959 stop.
EUR/USD
I decided to cover my long 1.0865 Euro position from last Monday at 1.0870 following the release of the Beige Book and I am now flat. Today I will again look to buy the Euro on any dip lower to 1.0790/1.0830 with a 1.0765 stop. I still do not want to be short the Euro at this time.
March Dollar Index
No change as I am still a seller on any rally higher to 98.60/98.90 with a 99.25 stop.
March DAX
The DAX plan worked well as shortly after I posted the DAX traded lower to my 9725 buy level before having a nice rally to 9810 which enabled me to cover this position at my 9765 T/P level and I am now flat. After the huge move higher off the 9200/9300 now major support zone the DAX is finding it difficult to break the 9800/9900 resistance level ahead of the next major resistance level at 10100/10200 as mentioned in yesterday’s commentary. Today I will again look to buy the market on any dip lower to 9610/9660 with a 9570 stop. I still do not want to be short the market at this time especially ahead of the now key ECB Meeting next Thursday.
March FTSE
The FTSE plan also worked well with the market trading lower to my average buy level at 6110 with a 6073 low print before having a nice rally to 6140 which enabled me to cover this position at my revised T/P level at 6130 as outlined by email to my Platinum Members and I am now flat. Today I will again look to buy the FTSE on any dip lower to 6045/6075 with a 6020 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
No change as I am still a small seller of the Dow on any rally higher to 16950/17020 with a 17070 stop. The market came twice to hitting my sell level before backing off and it is noticeable that the Dow is the weaker of the main US Indices over the past week probably on the back of the stronger US Dollar which really hit the Earnings of the Dow stocks in 2015.
March BUND
I was unlucky with my Bund call yesterday as after I posted the Bund traded to a 165.77 high print just missing my 165.80 sell level before selling off over 100 points and I am still flat. Today I will continue to look to buy the Bund on any further dip lower to 164.30/164.60 with the same 163.95 stop.
Gold Rolling Contract
Today I will raise my Gold buy level higher to 1218/1226 with a 1210 stop which is just below last week’s 1210 low print.
Silver Rolling Contract
Finally I was able to cover my long 14.70 Silver position at my revised 15.00 T/P level. Subsequently overnight after Silver sold off I have bought the market again at 14.85 with a 14.40 stop.
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