Well, the big theme from yesterday’s trading overnight session was the news that President Trump’s Corporate Tax Cut plan from 35% to 20% could be phased in over 5 years. The US Dollar and US Treasury Yields were already drifting lower during the Asian session yesterday, but the news was an additional factor that weighed on both assets. US equities were also unimpressed with all major equity Indices closing down between 0.05% and-0.35%. Sterling has been the outperformer in G10 currencies and in commodities oil prices have continued to edge higher.
To mark my 1425th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2750 for my Platinum Service which includes 1 to 4 updated emails throughout the trading day. This offer is open to both new and existing members and if anyone is interested can you please contact me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it made 43 points and is now ahead by 657 points for October, having made 447 points in September, 1560 in August, 1096 in July, 1023 in June, 1076 in May, 1375 in April, 1335 in March, 1481 in February and 1734 in January. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points.
So while nothing is set in stone yet, it is clear that the US Administration and Republican leaders are still struggling to find savings to make up for their wish to reduce the country’s corporate tax. We know that the Ways and Means panel will release the text of a bill on Wednesday and now reports yesterday suggest that the Committee is considering a phase in approach to reduce the corporate tax from 35% in 2018 to 20% by 2022 ( 5 years at a decline of 3% p/y).
While the US Dollar was already on the back foot, news of the “phase in” plan was seen as an additional excuse to sell the big dollar. Both DXY (-0.43%) and BBDX (-0.27%) Indices have given back some of last week’s decent gains. In G10, Sterling has outperformed ahead of the BoE rate decision on Thursday suggesting the market is gearing up for a hike which is currently priced at just under 90%. Somewhat surprising, CAD (-0.17%, USDCAD 1.2825) has been the only G10 currency unable to outperform the USD, despite the fact that oil prices have continued to climb with Brent up another 0.8% to $60.91 and WTI +0.4% to $54.13, the dovish BoC last week is seemingly still weighing on the Canadian Dollar.
After briefly trading sub 1.16 yesterday morning, EUR has been on a steady rise despite mixed economic data releases. A soft USD has been a factor, but on the positive front there also appears to be an increase in optimism in Spain after opinion polls suggest Catalan’s will vote against independence in December. Euro area economic confidence surged to its highest level in almost 17 years while German CPI data came in 0.2% points below expectations. So despite the country’s very strong economic backdrop, the CPI data highlights the challenge the ECB faces in getting inflation higher in the EU area.
The Australian Dollar has traded in a 32bps range over the past 24hrs and currently trades at 0.7690, marginally higher (0.10%) relative to yesterday’s opening level. China’s PMI data today will be important for the AUD, but ultimately US events later in the week (FOMC, ISM, Fed Chair nomination and payrolls) are the ones that will dominate and determine whether the Aussie can make a sustain move back above 77c.
NZD is essentially unchanged at 0.6880, but it did come under pressure yesterday following headline reports that the new Finance Minister suggested in a weekend TV interview that revising the RBNZ mandate could lead to lower interest rates if an employment target were included.
As for US data releases, PCE US Sep personal income printed in line at +0.4%, while spending was solid and a tenth stronger at +1% m/m. Meanwhile the low PCE (1.3% yoy) deflator was consistent with the quarterly numbers released last week.
This morning on the Economic Front we have Euro-Zone GDP, CPI and the Unemployment Rate at 10.00 am. This is followed at 12.30 pm by the US Employment Cost Index, and at 1.45 pm by the Chicago Purchasing Managers Survey. Finally at 2.00 pm we have the Conference Board Consumer Confidence.
December S&P 500
I am still flat the S&P which made new all-time highs on Friday before having a late sell-off which continued in yesterday’s trading session. Despite the McClellan Oscillator weakening to close with a large -122 print last night I still believe the S&P to be a buy until we get a serious sell-extreme which takes out the initial support at 2545. Today I will now raise my buy level to 2556/2562 with a 2550 stop. I still do not want to be short the S&P at this time but a break and close below 2545 will see me set up short positions for an ultimate move lower to 2505/2513 where I will be an aggressive buyer with a 2499 stop.
EUR/USD
Just as I posted early on Friday morning I was stopped out of my 1.1677 long Euro position at 1.1630. Subsequently I stayed flat until we got the US GDP data and after the Euro sold off I bought the market again at 1.1600 before exiting this position yesterday at my 1.1635 T/P level and I am now flat. Given how oversold the Euro is trading I will again look to buy the market on any dip lower to 1.1570/1.1610 with a 1.1535 stop. I still do not want to be short the Euro at this time.
December Dollar Index
My Dollar plan worked well on Friday with the market trading higher to my 95.05 sell level post the US GDP release before selling off to my 94.80 T/P level and I am now flat. The Daily Sentiment Index reading has jumped to 91% bulls which is the highest reading since December 15, 2016 at 96%. Today I will again look to sell the Dollar on any rally higher 94.90/95.30 with a 95.60 stop.
December DAX
I am till flat the market which has traded in a narrow range since last Friday. Today I will now raise my buy level slightly to 13090/13150 with a 13040 stop. Despite the DAX trading severely overbought I still do not want to be short the market at this time.
December FTSE
The FTSE just missed my 7430 buy level yesterday and I am still flat. Today I will lower my buy level slightly from 7390/7420 with a 7365 stop.
Dow Rolling Contract
The Dow just missed my 23325 buy level a couple of time since Friday before rallying and I am still flat. Today I will lower my buy level slightly to 23230/23290 with a 23170 stop. Despite the Dow trading severely overbought and a weak McClellan Oscillator I still do not want to be short the market at this time.
December NASDAQ
The NASDAQ rallied strong on Friday to close at new all-time highs and I am still flat. Today I will now raise my buy level to 6120/6175 with a 6080 stop. I still do not want to be short the market at this time.
December BUND
The Bund has rallied strongly since the lows recorded ahead of last Thursday’s ECB Meeting. Thankfully we had no sell levels over the last few days as yet again anyone trying to sell the Bund has been slammed. The Bund is again overbought, however I still would not be short and today I will now raise my buy level to 161.75/162.20 with a 161.45 stop.
Gold Rolling Contract
My long 1267 Gold position finally worked out with the market trading higher to my revised 1269 T/P level and I am now flat. I still do not trust this market and today I will again look to buy Gild on any dip lower to 1259/1266 with a 1252 stop.
Silver Rolling Contract
It took a while but finally Silver yesterday traded higher to my 16.90 T/P level on my latest 16.80 long position and I am now flat. Silver has now traded sideways for the past six weeks and we have done well to bank many points along the way despite the narrow price action. Today I will again look to buy the market on any dip lower to 16.40/16.70 with a 16.15 stop and a 16.90 T/P level if executed.
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