Yesterday’s flat fix of the USDCNY along with the increase in cost of the CNH on the interbank market ( up to 13.39% vs daily average of 4.54%) helped stabilise the currency. After trading to a high of 6.7078 before mid-day, the USD/CNH has been on a downward trend since and over the past hour it looks to be settling around 6.56, its lowest level since Monday last week. USD/CNY has also drift lower and it currently trading at 6.5711.The stabilisation in the currency, however, did little to calm the Chinese equity market. In another volatile session the Shanghai and Shenzhen composite indices ended the day down -5.33% and 6.60% respectively. Overnight the Yuan HIBOR Interbank Rate has surged to over 66% from yesterday’s 13.39% as every Yuan short is getting squeezed by the PboC.
To mark my 1000th issue of the tradernoble Daily Market Commentary I am offering a special 2 year rate of Euro 2500 for my Platinum Service which includes all my Premium Daily Commentaries and 1/5 updated emails throughout the Trading Session. This offer is open to existing and new members and if anyone is interested please email me on bryan@tradernoble.com for details.
For anybody following my Platinum Service it made 225 points yesterday and is now ahead by 1692 points for January.
Asian equity markets also ended the day in negative territory and while initially European and US equity indices appeared to have regained a stronger footing, lingering concerns over China’s growth outlook and a selloff in commodities dragged equity markets lower with resource companies leading the slide. The start of the Q4 earnings reporting season has also been a contributing factor as investors choose to wait and see to what degree company profits and outlooks have changed over the past quarter. In Europe the FTSE100 ended the day -0.69% and the Eurostock index closed at- 0.2% .Across the Atlantic, US equity Indices closed slightly in the green but markets are under pressure this morning following another 2.7% fall in the Nikkei to 17200. The Nikkei has now broken and closed below a well defined trendline and is leading the main Indices lower. The Nikkei is now down over 4000 points since its 2015 high.
In currencies, the AUD has been the G10 outperformer over the past 24 hrs, up 0.33% against the USD and currently trading at 0.6977. The AUD has benefited by a stabilisation in the CNY while at the same time oil related currencies have come under renewed pressure following the decline in oil prices. Notably too, Yen is marginally lower against the USD after outperforming every day last week.
Core Global Bond Yields have given back some of the gains from last week. 10y Bunds are up 2.7bps to 0.539% and relative to yesterday morning 10y UST are up 4.5bps and currently trading at 2.16%.Planned new issuance of US Treasury Bonds this week has probably contributed to their underperformance. In commodities, WTI and Brent are down 5.8% and 6.4% respectively. Gold is almost unchanged at $1094 and iron ore fell 2.0% to $41.3.
As for the data releases, the Eurozone Sentix investor confidence index fell to 9.6 in January from 11.4 in the previous month. The decline in the index was in line with expectations given the softness in equity indices at start of the year. In the US, the Fed labor market conditions index climbed to 2.9 in December after advancing a similarly strong 2.7 points in November and 2.9 points in October. In other news, the chief economist at PBoC’s Research Bureau Ma Jun said that the CNY will be more tied to a basket of currencies rather than the USD and that the PBoC would “appropriately limit” daily USD/CNY volatility.
Last Evening, Fed Member Lockhart said he favours continued tightening of monetary policy this year, and a global selloff in stock markets is unlikely to affect the U.S. economy.
This morning on the economic front we have UK Industrial Production at 9.30 am. At 12.00 pm we have the US NFIB Small Business Optimism Survey. Finally on another quiet day for economic data we have the US JOLTS Job Openings at 3.00 pm and this Survey is one that Fed Chair plays close attention to.
There is an Economic Conference in Paris today. The ECB’s Praet, The Fed’s Fisher and Governor Carney from The Bank of England are all due to speak and these speeches could well move the markets. Finally at 9.15 pm the Fed’s Lacker will speak on Economic Outlook in Columbia.
March S&P 500
It took a while but finally the S&P traded lower to my 1896 buy level before having a huge 25 Handle rally in the last hour of trading which enabled me to T/P on this position at 1905 and I am now flat. The overnight sell-off in the Nikkei coupled with ongoing weaker Oil prices sees the Equity markets under pressure this morning with the S&P trading as low as 1899 overnight. As I mentioned in yesterday’s commentary I believe the S&P will put in a meaningful bounce some where between the August 24th low at 1860 and 1890. The McClellan Oscillator closed weaker at -224 despite the Dow and S&P closing slightly higher. I would love to see the MO print at least -250/-290 and then I would be more comfortable in putting on a more Macro bullish position. Today I will again look to buy the S&P on any further dip lower to 1886/1894 with a wider 1879 stop. Again if I am taken long and subsequently stopped out I will use my 5 Handle Rule to go long again with a stop below whatever new low is printed. If the market trades lower without using my 5 Handle Rule I will be a very aggressive buyer in front of 1860 with a 1849 stop.
EUR/USD
My Euro plan worked well yesterday as the Euro traded lower to my 1.0850 buy level before having a nice rally to 1.0897 which enabled me to T/P at 1.0875 and I am now flat. At the moment everytime the stocks sell off the Euro rallies while conversely everytime stocks rally the Euro trades lower. Today I will continue with my strategy of buying the dip in the Euro and my buy level will be from 1.0815/1.0845 with a tight 1.0785 stop. I still do not want to be short the Euro at this time.
March Dollar Index
Overnight the Dollar traded higher to my 99.00 sell level before selling off which has enabled me to T/P at 98.75 and I am now flat. Today I will again look to go short on any rally higher to 99.15/99.40 with a 99.65 stop.
March DAX
No change as I am still a buyer on any dip lower to 9690/9750 with the same 9645 stop. Despite the huge Key Day Reversal last Friday I do not want to be short the DAX at this time especially given how oversold the market is trading.
March FTSE
Finally very late in the New York trading session the FTSE traded lower to my 5805 buy level before the market followed the Dow and S&P higher trading as high as 5875 which enabled me to T/P too early at 5825 and I am now flat. Today I will again look to buy any dip lower to 5770/5800 with a 5745 stop. Just like the S&P above the FTSE is coming close for me to put on a more Macro long position especially given how oversold the FTSE is currently trading.
Dow Rolling Contract.
The volatility I the Dow since the start of the year has just been incredible. Finally very late in the New York session the Dow traded lower to my revised buy level as emailed earlier to my Platinum Members at 16240. Subsequently the Dow rallied over 160 points which enabled me to T/P at 16300 and I am now flat. Given the volatility I will take profit when I see it as it gives you a clearer head to put on your next position and as you have seen over the past few months if you do not take your profit when it is available it will just evaporate. Today I will again be a buyer of the Dow on any dip lower to 16210/16270 with a 16160 stop. Given how oversold the Dow is trading I still do not want to be short the market at this time especially as the Fed can intervene and buy this market at any stage.
March BUND
Unfortunately the BUND just missed my 159.85 sell level after I posted which is frustrating when you see the BUND trading 100 points lower this morning. Today I will lower my sell level to 159.45/159.80 with a 160.05 stop. I will also be a small buyer on any aggressive sell-off to 157.80 where I will go long with a 157.45 stop.
Gold Rolling Contract.
No change as I am still a small buyer on any dip lower to 1075/1084 with the same 10690 stop.
Silver Rolling Contract.
I am still long Silver from last week at 14.19. I was almost stopped out overnight and today given that we have had such a good trading month I am going to lower my stop to 13.65 on this position.
Recent Comments