The risk-on mood that developed early yesterday morning in Asia on the back of the weekend poll from the Sunday Mirror pointing to a swing back to the ‘Remain’ vote gathered more force yesterday, especially in European Markets. After a 2.34% rise in the Nikkei, European Equities had stronger gains as Sterling buying continued. The Eurostoxx 600 Index jumped 3.65%, the FTSE closed up 3.04% and the German DAX by 3.43%. Meanwhile UK Gilt and German Bund Yields rose. Oil and metals rose form a softer US Dollar, while Gold closed lower. Elsewhere the INR has been more volatile on news that well-regarded RBI Governor Rajan is standing down.
To mark my 1100th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2500 for my Platinum Service which includes 1/4 updated emails throughout the trading day. This offer is open to both new and existing members and if anyone is interested please email me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it made 165 points yesterday and is now ahead by 1070 points for June. The previous three months saw gains of 1532, 2175 and 2265 points respectively. Since I started this service over 12 months ago it has averaged a monthly gain of 2200 points.
It has been nothing less than a five big figure gain for the GBP/USD since Asia opened on Sunday night from 1.42 to trade just over 1.47 this morning helped by a ORN/Telegraph poll which showed 53% ‘Remain’ and 46% ‘Leave’. The big move in Sterling is a clear example of how edgy markets are to the outcome of Thursday’s Referendum. A milder bid tone spilled over to the AUD/USD which is testing higher this morning to sit just below 0.75.
There has been no major data releases yesterday. EU President Tusk urged British Citizens to ‘Stay with us’. In the US, Minneapolis Fed President Neel Kashkari was speaking on ‘Too Big To Fail’ but was naturally asked about the economy and ‘Brexit’ in the Q&A. He said it would be better for the world economy if the UK voted to stay in the EU but that ‘Brexit’ financial stability risks for the US would likely be modest. He sees moderate growth with inflation gradually rising to 2.0% and declined to disclose how many rate hikes would be warranted. He welcomed James Bullard’s ‘out of the box’ approach to think about Fed Monetary Policy.
This morning the Nikkei closed 1.28% higher at 16,169 helped by a weaker Yen which sees USD/JPY back trading over 1.04.
This morning on the economic front we have UK Public Finances at 9.30 am. This is followed at 10.00 am by the latest German ZEW Survey for Current Situation and Expectations. Next at 11.00 am we have the UK CBI Trends Total Orders/Selling Prices. We have no US data but this afternoon the Fed Chair Janet Yellen testifies on Monetary Policy to the Senate Banking Panel. As well as the usual questioning on the economy and interest rates, there is no doubt there will be a discussion on ‘Brexit’ and the approach outlined by James Bullard of the St Louis Fed last Friday, virtually assuming little to no change in rates from here with the St Louis Fed’s view that the economy, unemployment and inflation close to long run equilibrium/medium term goals.
September S&P 500
The S&P plan worked really well yesterday as both my sell level and then my buy level got hit in what turned out to be a very volatile trading session. As expected there was no chance that the US would allow such a huge ‘open gap’ from last Friday’s Chicago close to at least not be partially filled which it did with a 2071.50 low print. Shortly after the US markets opened the S&P traded higher to my 2092 sell level before eventually having a 20 handle sell-off to a 2071.50 low print which enabled me to cover my short position at my revised 2087 T/P level. Subsequently in the last half hour of trading the S&P traded lower to my 2072 buy level before having a nice rally which enabled me to cover this position at my 2078 T/P level and I am now flat. I would expect the market to remain on hold to bid ahead of Yellen’s Testimony this afternoon and I will again look to buy the market on any dip lower to 2063/2070 with a 2058 stop which is just below the 2059 ‘open gap’ from Friday. Given the fact that Yellen is again testifying to the House Financial Services Panel tomorrow afternoon I do not want to be short the S&P at this time.
EUR/USD
My Euro plan worked well with the market eventually hitting my 1.1305 buy level before having a nice rally to 1.1350 this morning which has enabled me to cover this position at my revised 1.1330 T/P level as emailed to my Platinum Members and I am now flat. Today I will again look to buy the Euro on any dip lower to 1.1285/1.1315 with a 1.1255 stop. I still do not want to be short the Euro at this time.
September Dollar Index
No change as I am still a seller on any rally higher to 94.20/94.50 with a 94.90 stop.
September DAX
Unfortunately the DAX just missed my 9840 buy level after I posted yesterday morning and I am still flat. Today I will raise my buy level slightly to 9810/9870 with a tight 9765 stop. Given the extent of the move higher since the lows last Thursday I do not want to be short the market at this time.
September FTSE
The FTSE just missed my 6065 buy level by a few points after I posted yesterday morning and again this morning as the market is understandably nervous ahead of Thursday’s Referendum. As I have mentioned countless times that in my opinion the UK is not going to leave the EU and with the FTSE having very strong support between 6070/6100 I have decided to buy the market here at 6110 with a 6065 tight stop. If I am stopped out of this position I will be a more aggressive buyer in front of 6050 with a 6015 stop.
Dow Rolling Contract
The Dow just missed my 17760 buy level with a 17780 low print before trading 100 points higher and I am still flat. Today I will move my buy level slightly higher to 17730/17790 with a 17675 stop. Given the continued weakness in the US Dollar I do not want to be short the Dow at this time.
September BUND
There is no doubt there is a very strong possibility that the Bund finally put in a major top at the 165.68 high print last Thursday. Yesterday my Bund plan worked well as shortly after I posted the Bund traded lower to my 164.20 buy level before having a nice rally which enabled me to cover this position at my 164.50 T/P level and I am now flat. The Bund has very strong support at 163.50 and a break and close below here will be very bearish and would strengthen the view that the Bund has finally put in a top of some significance. Today I will be a buyer on any dip lower to 163.45/163.75 with a tight 163.20 stop.
Gold Rolling Contract
I am still flat Gold and ahead of Yellen’s testimony this afternoon I will now lower my buy level to 1260/1267 with a 1254 stop.
Silver Rolling Contract
No change as I am still long from last week at 17.45 with the same 16.95 stop.
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