The USD has taken a breather for once as the market waits for any news from the White House as early as this week on additional tariffs on another $200bn of Chinese imports. The DXY Index has pretty much pulled back to where it ended last week. The AUD and other currency pairs have clawed back some territory for now, with Sterling the outperformer on another volatile trading session.
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For anyone following my Platinum Service it made 35 points yesterday and is now ahead by 157 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
As post this morning The Australian Dollar is sitting close to 0.72 having repeated its whipsaw pattern for the second day running, yesterday initially high on the stellar GDP print (even above our above-consensus pick) but relenting as USD support reversed that post-GDP spike. The AUD briefly then tested below 0.7150 in the APAC session, but there appears to be less continuing enthusiasm for the USD, despite looming news out of the White House on new tariffs on $200bn of Chinese imports.
Sterling has had its own rollercoaster past 24 hours, getting a big 180 point move higher (against the US Dollar) on a more conciliatory approach from Germany to Brexit. Germany and the UK are said to drop key Brexit demands, the Bloomberg headline said. Seemingly veritable anonymous sources say that Germany is ready to accept a less detailed agreement on the U.K.’s future economic and trade ties with the EU in a bid to get a Brexit deal done. The idea would be that the Europeans and the U.K. would be willing to settle for a vaguer statement of intent on the future relationship, postponing some decisions until after Brexit day. In other words kicking the can down the road.
My own view that given agreement on the ‘’Withdrawal Agreement’’ is said to be 80% done, any easing up or loosening of the future economic and trade ties could make reaching a deal easier. But I fail to see how a ‘vaguer’ future trading arrangement will work with Parliament’s ‘meaningful’ vote requirement? The UK Parliament will need to be able to make an informed decision. One of the big fears of the ‘’Remainers’’ is that the UK exits without all this detail properly sorted and then it is too late. Sterling sits at 1.2910 this morning, (EUR/GBP at 0.9010) having tested 1.2980 earlier which was considerably higher than the 1.2785 morning low. The German government came out and said that their position was unchanged, reversing a good part of Sterling’s move higher.
Elsewhere in Europe, conciliatory remarks from Italy’s Di Maio (one of the two Deputy PMs) that Budget talks had been very productive and budget laws will keep Italy finances in order. He suggested that the flat tax and citizens’ basic income will be included with all sides working on how these are funded. Italian bond yields pulled back on the day. This is also an unfolding story not yet complete. The Euro has also made some gains against the USD.
The CAD has been relatively steady. The Bank of Canada left rates on hold as expected and continues signalling a near-term rate hike, offering some intraday support, as did news that the Canadians are back negotiating NAFTA with the Americans in Washington. As a headwind for the loonie, oil prices were lower yesterdayt.
Economics
The US Trade Deficit for July was very close to expectations, this report coming after the preliminary goods only trade balance released a week ago and confirming a monthly rise in the trade deficit.
Commodities, Bonds, and Equities
Apart from oil, it has been patchy on the commodity front, the LMEX up 0.46%, gold up even less, but the iron ore and met coal higher. Bond yields were contained and marginally higher in the main with European stocks lower as was the NASDAQ, weighed down by the FANG stocks. Netflix and Twitter stocks down over 6% as key tech executives came under the spotlight on Capitol Hill.
This morning on the Economic Front we have German Factory Orders at 7.00 am. Next we have US Challenger Job Cuts and the ADP Employment Change at 12.30 pm and 1.15 pm respectively. These reports will be closely ahead of the Non-Farm Payrolls tomorrow. This is followed at 1.30 pm by the Weekly Jobless Claims, Non-farm Productivity and Unit Labor Costs. At 2.45 pm we have Markit Services/Composite PMI. Finally we have ISM Non-Manufacturing and Factory Orders at 3.00 pm.
September S&P 500
Yet again the buy the dip paid dividends in the S&P with the market trading lower to my 2880 buy level before rallying back above 2890. As so many of my Indices hit at or near the same time I used this rally to cover my long position at my revised 2884 T/P level and I am now flat. AS I mentioned yesterday as long as the S&P can hold the initial support level from 2850/2860 then this market will continue to be a buy on dips despite the fact that we are in the seasonally challenging September/October timeframe. Below here we have the key 50 Day Moving Average which has now risen to 2822. A break and close below 2850 is a short-term sell signal while a break and close below 2815 is a long-term sell signal. Today I will again look to buy the market on any dip lower to 2870/2877 with a 2863 stop. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer from 2849/2856 with a 2843 tight stop. I still do not want to be short the S&P at this time.
EUR/USD
The Euro just missed my initial 1.1525 buy level with a 1.1542 low print before the market rallied to an initial rebound high of 1.1640 which was just shy of my 1.1645 sell level. Subsequently the Euro sold off before having a further rally into the New York close. As I did not want to run the risk of my sell range getting triggered I emailed my Platinum Members to cancel and sell level and I am still flat. As I go to press the Euro is now trading at 1.1650. The Euro has strong resistance from 1.1695/1.1745 and today I will be a seller in this area with a 1.1775 tight stop. I will also raise my buy level to 1.1530/1.1570 with a 1.1495 stop.
September Dollar Index
I am still flat the Dollar and today I will now lower my sell level slightly to 95.50/95.90 with a 96.30 stop.
September DAX
Late yesterday afternoon the DAX finally traded lower to my 12040 buy level before having a small rally. I used this rally to exit this long position at my revised 12060 T/P level and I am now flat. The 11910/11970 area for the DAX must hold as a break and close below 11950 is a long-term sell signal. Today I will be a small buyer on any dip to this area with a 11855 tight stop. Given how oversold the DAX is trading I no longer want to be short the market at this time.
September FTSE
The FTSE continued to sell-off after I posted yesterday morning with my second buy level at 7395 soon filled for an average long position at 7420. After the ‘’Brexit’’ headlines hit the news wires Sterling rallied nearly 200 points and this move higher in the Pound saw a sharp sell-off in the FTSE to my 7365 stop and I am now flat. Frustratingly the FTSE the Pound sold off leading to a small rally in the FTSE into the New York close as yet again my stop was too tight, with the market trading to an overnight high so far at 7406. Today I will again look to buy the FTSE on any further dip lower to 7300/7340 with a 7270 stop. A break and close below 7320 in the FTSE is also a long-term sell signal.
Dow Rolling Contract
I am still flat the Dow as the market continues to hold the initial 25800 support level. Today I will raise my buy level slightly to 25620/25780 with a higher 25525 stop. Again if I am taken long and subsequently stopped out of this position I will be a more aggressive buyer on any further dip lower to 25240/25380 with a 25150 stop. I still do not want to be short the Dow at this time.
September NASDAQ
The NASDAQ got hit hard yesterday led by a 6% fall in Twitter with the stock now threatening its 200 Day Moving Average which comes in a price of $32. It is only last June that Twitter was trading above $48 so we need to keep this stock on our radar. Yesterday after the market traded lower to my 7540 initial buy level I emailed my Platinum Members to exit any long position at 7545 and I am now flat. The market has support below here at 7450 and today I will again be a buyer from 7420/7460 with a 7380 stop. Given the breakdown in NASDAQ I will now lower my sell level to 7580/7620 with a 7660 stop.
September BUND
My Bund plan worked well with the market trading lower to my 162.35 buy level before rallying to my revised 162.55 T/P level and I am now flat. Today I will again look to buy the market on any further dip lower to 161.60/162.00 with a 161.20 stop. I want to wait one more day before looking to set a short position as I want to see a second consecutive close below 162.80.
Gold Rolling Contract
No change as I am still a buyer on any dip lower to 1177/1185 with the same 1169 stop.
Silver Rolling Contract
Finally overnight Silver traded higher to my 14.25 T/P level on my 14.20 large long position and I am now flat. The drop to 13.98 on Monday saw the Daily Sentiment Index fall to just 8% bulls and this move lower was not confirmed by Gold. Today I will again look to buy the market on any further dip lower to 13.65/14.05 with a 13.25 stop. Silver needs to break and close over 15.16 to confirm a low has been put in place.
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