Much of the blame for the abrupt reversal in the US Dollar’s post – Payrolls performance is being laid at the feet of reported comments from US President Obama, attending the G7 Summit in southern Germany at the weekend, that the strong US Dollar is a problem. The comment was sourced to a French G7 official, looked odd at the time, and has since been denied by the White House.
For anybody following my new Platinum Service, it made 170 points yesterday, coming on top of last week’s 955 point gain. If anybody is interested in this new service please email me on bryan@tradernoble.com
No matter, after a brief retracement on the denial, the US dollar has continued to trend lower, led by EUR/USD and which has just move back above 1.13 having fallen to below 1.11 on Friday. It stems the damage to positioning, from the initially reported remarks, was already done. The EUR-recovery has also been aided by a fresh, albeit modest, back up in bond yields, 10 year Bunds +4.5bps to 0.876%. In contrast, US Treasury yields have given back some of their pre and post-Payrolls rise, with 10 Year Yields back down 2.5bps to 2.382% and post-Payrolls high of 2.43%. Equities, that didn’t appreciate the message from the Payrolls report – that a Q3 2015 Fed ‘lift-off’ is still on the cards – are weaker across the board Monday, in the US by 0.5-1.0% and after most European indices lost more than 1%. The Germane DAX has now given back over 10% of its January/April rally.
The Euro move higher is without benefit of any hard evidence of progress on discussions between Greece and her creditors, even though Greek PM Tsipras looks to be in the process of trying to mend fences with the EU after some of the rhetoric he unleashed in front of his own Parliament on Friday and where he said that its lenders should “not humiliate Greece over debt” and called the (EC) proposal “absurd” and “irrational”. He went on to say “I would like to believe that this proposal was an unfortunate moment for Europe, or at least a bad negotiating trick, and will very soon be withdrawn by the same people who thought it up”. EC President Juncker subsequently spurned an invitation from Tsipras to meet at the weekend according to press reports, a high ranking G7 official quoted saying that Juncker believed Tsipras’ speech left little to discuss.
Yesterday we have also had a change in tone from the US, with President Obama saying that Greece must pursue reforms to satisfy creditors. Previously US rhetoric, from Treasury Secretary Jack Lew, et al, has been to the effect that EU leaders should go to any lengths to avoid a so-called ‘Graccident’. One potentially positive development is wire comment that Greece and her creditors are discussing extending the current Eurozone bailout – currently due to expire on June 30 – until March 2016, though without it seems, much if any change in the conditionality Europe wants attached to any such extension.
This morning on the economic front we have German Labour Costs at 7.00 am. This is followed at 9.30 am by UK Trade Balance. At 10.00 am we have Euro-Zone GDP. The US will release its latest NFIB Small Business Optimism at 2.00 pm. Finally we have Wholesale Inventories and the JOLTS Job Openings which we now know is a huge favourite of Fed Chair Janet Yellen with both of these to be released at 3.00 pm.
June S&P 500
The S&P plan worked very well yesterday as the market had a nice drop to my 2078 buy level before having a quick rally which enabled me to cover this position at 2085 as outlined in my Platinum Service and I am now flat. The S&P has its next major support at the 2065/2070 level and with the market oversold today and the fact that today is a Tuesday which nearly every Tuesday so far this year has been an up-day, I am not inclined to short the market at current prices. Today the S&P is trading at the bottom of both its Bollinger Band and Williams Index and for this reason I will again be a small buyer from 2071/2078 with a 2066 stop. If I am taken long and subsequently stopped out of this position I will use my ‘5 Handle Rule’ to go long again with a stop below whatever new low is printed. Given how oversold this market is I do not want to be short the S&P today.
EUR/USD
My view that last week’s sell-off in the Euro was false was certainly proved to be correct yesterday as the Euro which unfortunately just missed my buy level by a few points before going on to have a 200 point rally and I am still flat. The fact that the Euro managed to close over 1.1250 is very constructive and to me it is only a matter of time before this market trades back to at least 1.1550/1.1600. Today I will be a small buyer on any dip to 1.1220/1.1260 with a 1.1170 stop. Naturally I do not want to be short at current price levels.
June Dollar Index
Just like the EUR/USD above the Dollar just missed my 96.60 sell level after the European Markets opened this morning which was again very frustrating as the Dollar then sold off 140 points and I am still flat. I really believe that the high for the year is in the Dollar at just above 100 which was made in April as the economic numbers do not justify a Dollar at current levels. Today I will lower my sell level to 95.60/96.00 with a 96.40 stop.
June DAX
Shortly after I posted yesterday morning the DAX traded lower to my 11130 buy level before very quickly stopping me out of this position for a small loss at 11070. Subsequently the DAX traded lower to my second buy level at 11020. I am still long as the DAX is extremely oversold after its 10% fall over the last six weeks and I will leave my stop the same at 10960. Again if I am stopped out of this position I will be a more aggressive buyer in front of 10900 with a 10810 stop.
June FTSE
I am still flat the FTSE as the market just missed my 6840 sell level before following the other major Indices lower. Just like the S&P and DAX the FTSE is also trading outside the bottom of its Bollinger Band and at the bottom of its Williams Index. For this reason I will look to buy the FTSE on any further drop to 6700/6730 with a 6660 stop. I will leave my sell level unchanged at 6840/6870.
Dow Rolling Contract
My Dow plan also worked very well yesterday as shortly after 6 pm the Dow traded lower to my 11770 buy level before having a nice spike which enabled me to cover this position at my 11830 level as outlined in my New Platinum Service and I am now flat. Today I will again be a small buyer on any dip lower to 11700/11760 with an 11660 stop. Given how oversold the Dow is currently trading I do not want to be short the Dow at this time.
September BUND
My BUND plan also worked well as shortly after the European Markets opened the BUND traded lower to my 150.30 buy level before having a nice rally which enabled me to cover this position at 150.80 which was again outlined in my Platinum Service and I am now flat. The BUND has very big support at the 149.50/150.20 level and I would expect the market to bottom in this area and mount at least a 200 point rally to correct the oversold nature of the market. Today I will again be a small buyer from 149.80/150.30 with a wider 149.40 stop.
Gold Rolling Contract
Finally we are seeing Gold trying to mount some sort of bounce which is to be expected when you consider how weak the Dollar has gotten since early yesterday morning. I am still flat Gold and today I will move my buy level higher to 1158/1166 with a 1148 stop.
Silver Rolling Contract
The move lower initially in Silver finally saw the market trade lower to my 15.90 buy level. I am still long and today I will raise my stop on this position to
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