Yesterday was the quietest day of the year so far. Now all eyes switch to the policy decisions of the BOE and ECB this morning. Confidence in a 25 basis point cut to the ECB’s main Refi Rate is running high as are expectations that the BOE will announce an extension of its QE gilt-buying programe, most likely by £50bn GBP. Both outcomes look to be well priced into both the EUR and GBP FX rates. The scope for significant volatility therefore resides on whether the ECB cuts by more than 25 basis points or leaves rates unchanged. At 1.30pm we have the ECB press conference, just as the Weekly Jobless Nos from the US are released, which will be carefully watched ahead of the Payroll Nos, which are released tomorrow. In other news, European Services PMI were soft and France is increasing its tax on the wealthy to meet its budget targets.
Sept S&P 500
I have closed my S&P position this morning at 1364 as I don’t want a position ahead of todays announcements. The S&P is very overbought and the McClellan Oscilator is at extremely overbought levels which has often led to a good sell off in the past. If it trades up to 1372/1377 I will go short with a 1380 stop. I do not want to be long at this time.
Sept FTSE
No change, I am still short from 5645 and I will widen my stop to 5670. I will still look to take profit on any move back to the 5580/5600 area.
Sept EURO
The Euro dropped into my buy zone yesterday and I went long at 1.2530. As I said yesterday I cannot believe how weak the Euro is, given where Oil, Gold, and Equities are. I will leave my stop at 1.2490 and I will be very surprised if I am not stopped out. If the market rallies I will look to take profit in front of 1.2600.
Sept Bund
The Bund has had a big breakout through the 142.00 resistance area. Today I will look to go long from 142.20/142.40 with a tight 141.95 stop.
Silver
I have taken profit this morning on my 27.80 long at 28.20. I want to see how the market trades from here to 29.00. If we break 29.00 I will go with it as it should lead to a test and break of 30.00.
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