Yesterday, for the first time in over a week almost every currency traded on the same big figure as it did last Friday. In part this is explained by the public holiday in the US which shut all markets there. However a general lack of fresh news and a very defensive mood ahead of Thursday’s ECB Council Meeting have left investors unwilling to commit fresh capital in potentially very volatile conditions. Swiss National Bank sight deposit data suggests the Central Bank may have intervened to buy around CHF 13 billion of foreign currency over the last week, but while it may be tempting to conclude that this helped EUR/CHF bounce off its lows sub-90, there is of course no information on what rates the SNB actually dealt. It may have been 1.15 or even 1.10 and with a spot rate of 1.0160 this morning, it is just as likely that they made either a loss or a profit. Certainly, their CHF450+ billion stock of foreign assets have taken a mark-to-market hit of anything up to CHF90 billion. Ouch!
The Danish Central Bank cut its lending rate yesterday, from 0.2% to 0.05%, and its deposit rate from -0.05% to -0.2%, leaving both in line with ECB equivalents. Since the SNB move last week there has been increased investor and corporate interest in every country with a fixed exchange rate regime. Hong Kong, Saudi Arabia, Bulgaria and the UAE are just some of the 37 countries around the world with a population over 1 million whose currency is pegged.
Overnight China reported its GDP for the last quarter which printed it 7.3% versus 7.2% expected. This has helped Chinese shares rebound 2.4% after yesterday’s 7.7% plunge Consequently European Equity markets are opening higher this morning.
This morning on the economic front we have the German ZEW Survey at 10.00 am. This is followed at 3.00 pm by the US NAHB Housing Market Index.
March S&P 500
The S&P plan worked out well in yesterday’s shortened trading session. Soon after I posted, the S&P traded higher to my 2017 sell level before having a nice sell-off into its 4.30 pm close which enabled me to cover this position at 2010 and I am now flat. The S&P is trading higher this morning on the rebound in Chinese shares and I would expect that we will have to get the ECB Meeting out of the way on Thursday before we see more decent selling. The market is still stuck in the neutral trading range of 2016/2031 and we need to spend at least 3 days outside this area in order to set the next major move. Today I will move my sell level higher to 2028/2033 with a 2037 stop. I will also move my buy level higher to 1998/2004 with a 1993 stop.
Euro/USD
No change as I am still a small buyer on any dip to 1.1490/1.1530 with the same 1.1475 stop. We still have an ‘Open Gap’ from 2003 at 1.1212/1.1374 which may attract attention before the Euro eventually bottoms.
US Dollar Index
No change as I a m still short from last week at 92.80 with the same 93.40 stop.
March DAX
After I posted yesterday morning the Dax just missed my 10170 buy level with a 10190 low before again trading 100 points higher. The Dax is very overbought after its 700 point rally and new all time highs since last Thursday’s low. Given the fact we have the very important ZEW Survey at 10.00 am, I am going to raise my sell level to 10350/10390 with a 10430 stop. I will also raise my buy level slightly to 10160/10210 with a 10120 stop.
March FTSE
I was extremely unlucky with my 6490 buy level as shortly after I posted the FTSE made a low at 6492 before having a nice 80 point rally and I am still flat. The price action is continuing to tell me not to be short the market and for this reason I will raise my buy level slightly to 6490/6520 with a 6465 stop which is just below the key 6480 pivot point.
Dow Rolling Contract
No change as I am still flat the Dow as the expected rally continues ahead of Thursday’s key ECB Meeting. Today I will raise my buy level slightly to 17390/17430 with a 17360 stop.
March BUND
After I posted yesterday morning the Bund traded higher to my 157.85 sell level. I am still short and I will lower my stop to 158.20 on this position. If I am stopped out of this trade, I will be a more aggressive seller in front of 158.40 with a 158.70 stop.
Gold Rolling Contract
Gold is now up $100 since making its low at the end of December and is trading at 1292 this morning. However it is now trading at the top of its Bollinger Band and Williams Index and for this reason I do not want to chase the market higher from here. I will leave my buy level the same at 1258/1265 with a 1248 stop.
Silver Rolling Contract
No change as I am still long Silver at 16.30 with the same 17.40 stop. If it breaks 18.20, I will raise my stop to 17.90.
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