Markets ended the day little changed yesterday. No key economic data was released and, apart from further Yen weakness, movements in other currencies mainly reflected flows and positioning. The Yen has failed to rally on the back of Newswire comments that the G7 may issue a statement in front of Friday’s G7 gathering in Moscow bemoaning risk of competitive currency devaluations and saying that FX rates should be market determined. From below 92.60 yesterday morning USD/JPY rose above 94.20 this morning. In Europe headlines from the Euro-Zone Finance Ministers Meeting have focused on the strength of the Euro. Whilst French officials continue to call for a weaker Euro, German Minister Rossler said policies should focus on improving competitiveness rather than influencing the exchange rate. He was backed up by Bundesbank President Wledmann who said policy makers should not target a weaker Euro and latest indicators don’t signal a serious overvaluation of the Euro. In the US, the Fed’s Yellan said that the Fed will continue to take forceful action to increase the pace of economic growth and job creation.
This morning on the economic front we have UK PPI and the ONS House Price Index. Spain and Italy have Bill Auctions and later in the US we have Mortgage Delinquencies and the Monthly Budget Statement whilst later the Fed’s George speaks on the economy.
March S&P 500
The S&P just missed my 1509 buy level with a 1509.75 low before having a nice rally to 1517. Yesterday was probably the quietest trading day of the year with no news and and very little movement. I did not trade yesterday and I still want to use any rally to 1525/1530 to get short with a 1533 stop. On the buy side I am only interested this morning in going long from 1502/1506 with a 1499 stop. I am conscious how overbought this market is since Jan 1st but we have to wait for a sell extreme to get short. Again it will take a break and close below 1490 to change the technical outlook.
Euro/USD
Very unlucky yesterday as the Euro just missed my 1.3360 buy level with a 1.3362 low before having a nice rally to 1.3425 on comments from Bundesbank President Wledmann. It is clear that Germany does not want a weaker Euro as it would lead to higher inflation whereas France and Southern Europe needs a lower Euro. This morning I will lower my buy level to 1.3320/1.3345 with a 1.3295 stop. I do not want to be short at this time.
March BUND
The Bund worked well yesterday and I was able to take profit at 142.70 on my 143.10 short position and I am now flat. I am surprised how well the Bund is holding in and this morning I am a small buyer on any dip to 142.50/142.70 with a 142.40 stop. I do not want to be short at this time.
March DAX
The Dax continues to trade heavy and is the only main index down for the year so far. The Dax traded down to my 7610 buy level before having a nice rally to 7640 where I was able to take profit and I am now flat. This morning I will look to reset my long position on any dip to 7550/7570 with a 7530 stop. This 7530/7550 is key as a break and close below here will be bearish.
March Nasdaq 100 Rolling Contract
No change as I still want to sell any rally to 2800/2820 with a 2840 stop.
GBP/USD (Cable)
Cable having had a nice rally on Thursday and Friday got hammered yesterday. The next big support is around 1.5600. This morning I will use any further weakness to 1.5580/1.5610 to get long in small with a 1.5560 stop.
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