A combination of Oil price volatility and ongoing Greek headline volatility looks to be driving intra-day swings in markets. The Canadian Dollar sits at the bottom of the G10 FX Board over the past 24 hours, on a combination of the latest slippage in Oil to the $50 level and commentary from Bank of Canada officials blaming Oil for weakness in the economy and to last Month’s rate cut. Deputy Governor Wilkins said they could well cut rates again in the coming weeks if the economy does not pick up. This latest comment has weighed on all Commodity currencies in general.
The US Dollar has drawn support from the rise in Treasury Yields with the 10 Year Note now trading at 2% for the first time since January 9th, which is a 35bp rise since early last week.
US economic data was mixed yesterday, with the fall back in the NFIB Small Business Optimism Survey which printed 97.9 from 100.4 last month. However the JOLTs Job Openings came in stronger than expected, punching above the 5 million mark for the first time since 2001. This provides some support for the view that the rise in earnings reported in last Friday’s US Payrolls Report may be the start of a firmer trend.
In this vein, incoming Fed rhetoric remains on the hawkish side. To emphasise this point yesterday Fed hawk Jeffery Lacker said that June looks like the attractive option for the first Fed rate increase. Also yesterday in an interview with the Financial Times San Francisco President John Williams also said that June looks favourite for the first rate rise. Mr Williams tends to have the ear of Fed Chair Yellen as he was Research Director at the San Francisco Fed when Ms Yellen was at the helm. Williams also said in his interview that the time for the US Central Bank to start raising rates is getting closer and closer amid faster than expected wage rises in January and really strong hiring. Williams also said that some investors may be caught out by a rate increase but that should not stop the Fed from tightening policy if necessary.
Today we have no economic data of note due on either side of the Atlantic. At 1030 am the Bank of England will release its latest Inflation Report.
March S&P 500
Normal service resumed for the S&P yesterday with the market trading all over the map, as the market was driven by Greek headlines as soon as it hit the wires. Yesterday the S&P plan worked out very well as shortly after lunch the S&P traded higher to my 2057 sell level before getting hit hard on the weaker Oil prices which saw the S&P trade as low as 2043 which enabled me to cover this position at 2049 and I am now flat. Following some positive Greek news the market spent the rest of the session trading higher with the S&P closing in the key 2060/2070 resistance area. If the S&P can break and close over last Friday’s high at 2068.50 it will be positive in the short term and I would then expect the market to retest last December’s 29 high at 2090. A break and close over 2090 will be very bullish.
Today I will be a small seller on any further rally to 2066/2072 with a tight 2075 stop. Given the positive price action yesterday I will also raise my buy level to 2047/2053 with a 2041 stop. Remember we still have an ‘Open Gap’ from last Wednesday at 2029/2036 and if I am stopped out of any long position today I will be a more aggressive buyer from 2030/2036 with a 2025 stop.
EUR/USD
Shortly after I posted yesterday morning the Euro traded lower to my 1.1290 buy level. I am still long and I will leave my stop the same at 1.1245. If I am stopped out of this position I will be a more aggressive buyer in front of 1.1180 with a 1.1140 stop.
US Dollar Index
No change as I am still short at 94.70 with the same 95.10 stop. The Dollar still needs to break and close below 93.80 for the market to turn bearish. For this reason I will still be a small buyer on any dip lower to 93.80/94.10 with a 93.55 stop.
March DAX
I was very lucky with my DAX short position as after I went short at 10740, the market just missed my 10810 stop before getting hard on some bearish Greek news which enabled me to cover this position at 10690 and I am now flat. The DAX is going to continue to have these wild fluctuations until the Greek situation and to a lesser extent Ukraine are resolved. I have to respect the fact that the DAX is having trouble closing below the now key 10660 support level and today I will move my buy level higher to 10680/10720 with a 10640 stop. I do not want to be short the DAX at this time unless we spike higher to 10950/11000 with a 11040 stop.
March FTSE
The Ftse plan also worked well yesterday as shortly after I posted the Ftse traded higher to my 6780 sell level. As the Ftse continues to trade in a very narrow range each day – especially in comparison to the other major Indices – it is only possible for me to look for smaller price movements. For this reason I covered my short position at 6750 and I am now flat. Today I will again look to go short on any move higher to 6790/6820 with a 6835stop. I still do not want to be long the Ftse at this time.
Dow Rolling Contract
The Dow plan also worked well yesterday as shortly after I posted the Dow rallied to my 17810 sell level before having a nice sell-off which enabled me to cover this position at 17760 and I am now flat. As I pointed out at last night’s Financial Markets Analysis session the Dow has huge resistance between 17950/18100 and it is going to take a lot of good news for the market to break this now key resistance area. Today I will again look to go short on any further spike higher to 17890/17940 with a 17980 stop. Given the fact that the Dow has now rallied nearly 900 points off last week’s low I do not want to be long the Dow at this time.
March BUND
Today I will lower my sell level slightly for the Bund to 158.80/159.10 with a lower 159.30 stop. Given how low Bund Yields are currently trading I do not want to be long the Bund at this time.
Gold Rolling Contract
After I posted yesterday morning Gold traded lower to my 1233 buy level. I am still long with the same wider 1217 stop. Gold has now fallen nearly $90 since it made its high at the end of last month.
Silver Rolling Contract
Just like Gold above, Silver traded lower to my 16.70 after I posted yesterday morning. I am still long and I will raise my stop slightly on this position to 16.30.
Recent Comments