There have been some big FX moves over the past 24 hours centred around the Euro and the USD in the wake of the Fed announcements yesterday coming with a hawkish leaning, followed yesterday afternoon with the formal (and expected) ending of ECB’s Asset Purchase Programme (APP), but pushing out expectations of when rates might be first adjusted and laced with ‘’uncertainty’’ caveats from the ECB President Draghi. After making some modest gains to around 1.1852, the Euro was sold aggressively lower, smashing though 1.18 and 1.17, continuing to lose ground, sitting currently at the overnight lows below 1.1580.
To mark my 1600th 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 To demonstrate this value, a monthly subscription over the same period would cost 4440 euro in total This offer represents a 38% discount and is open to both new and existing members. If anyone is interested in this offer can you please email me on bryan@tradernoble.com for details
For anyone following my Platinum Service it lost 33 points yesterday and is now ahead by 174 points for June, having made 1927 points in May, 1657 points in April, 1760 points in March, 2256 points in February, 879 points in January and 946 points in December. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
I have a YouTube Channel which contains recent interviews I have given. This can be viewed by clicking HERE Please subscribe to this for new interview notifications
Among the other non-USD majors, the AUD has taken nearly as much of a hit, the Euro down 2.1% on the move and the AUD down a big figure from 0.7560 to 0.7475/80, down by over 1% in the wake of the ECB announcement. Base metals were softer, as was Brent, though the bulks were little changed, gold a tad higher. Yesterday’s mix May Employment report and Chinese activity data have also not helped. The Aussie is lower on most of the crosses, barring the Euro.
The ECB announced no changes to rates (entirely expected) but that the APP beyond September would be tapered from purchases of 30bn in September to 15bn per month in the December quarter before ending in December. That part of it was expected. While inflation was upgraded from 1.4% for this year and next year by 0.3% to 1.7%, there was no change to the 2020 forecast that remained unchanged at 1.7%. No 2% handle and thus not yet getting to target. Couple that with the prospect now that rates will be on hold at least through the summer of 2019, rather than an expectation of a move a year from now and the seeds were sown for a pullback in the Euro. After recent almost-hawkish remarks from ECB Chief Economist Praet, the market was hoping for more and disappointed.
There has also been reporting in the German press suggesting that the Bavarian CSU is considering breaking with Merkel’s CDU, adding to the Euro’s woes. Bavaria’s CSU is demanding that refugees are immediately turned away at the border, while Merkel’s CDU party wants talks with other EU countries on policies to curb illegal immigration first.
Speaking at his press conference, Draghi described why the ECB took the decisions it did today and was asked whether he might be able to raise rates once before he leaves (Oct 2019). His watchword was uncertainty, something he repeated. This did not sound like a man or Governing Council that was especially confident in why they decided to end QE. You could be forgiven for thinking that the ECB has set the market up nicely to expect more and delivered a result where the market has not over-reacted to anything that could be interpreted as hawkish.
After stalling initially after the FOMC announcement, ostensibly on US-China trade tensions with some expectation the White House would wheel out a list of new tariffs on Chinese imports, it has been one-way traffic, the DXY index up 1% to 94.73. (Speaking on Fox News last evening, the President said that ‘’China could be a little bit upset about trade because we are very strongly clamping down on trade’’.) The dollar’s resurgence was done no harm by the May US Retail Sales report revealing headline sales growth of 0.8%, double market expectations and for the Retail Sales Control Group that feeds into Consumer spending, it rose 0.5% (0.1% better than the consensus), coming with a handy 0.2% upward revision to April. The Atlanta Fed’s GDPNow estimate was nudged higher from 4.6% to 4.8% on the basis of higher growth in consumer spending. Weekly US Jobless Claims remained low, down 3K to 218K for the week ended June 9.
UK Retail Sales continued their saw tooth pattern, in May blowing expectations apart, rising by 1.3% in the month (expectations were 0.3%), thanks to the Royal Wedding and very good weather. This supported sterling (and continued to do so against the Euro), but as the Euro headed south, so too did the Cable.
This morning on the Economic Front we have the Bank of Japan rate announcement and press conference. As I go to press we have no specific time for these events. At 7.00 am we have German Wholesale Inventories and this is followed at 10.00 am by Euro-Zone CPI. Next at 10.45 am we have the ECB’s Coeure’s speech. This is followed at 1.30 pm by the New York Empire State Manufacturing Index. Finally we have Industrial Production and the Michigan Consumer Sentiment Index at 2.15 pm and 3.00 pm respectively.
September S&P 500
Yesterday was certainly a trading session of narrow margins for my calls with the S&P just missing my 2769 buy level with a 2772 low print before rallying for most of the US session after the ECB said it would not start raising Interest Rates until the summer of 2019. I am still flat after a trading session when the VIX fell 6.5% to 12. Today is Expiration for both Futures and Options for the June Contracts on what can be a difficult day to trade. I am expecting a more significant test of the downside in the coming days after yet another upward Quarterly Expiration as no matter what bad news is thrown at this market the S&P still manages to rally. Today I will now raise my S&P buy level to 2768/2776 with a 2761 stop. Meanwhile I will leave my sell level unchanged from 2801/2809 with the same 2815 stop. Again if I am taken short and subsequently stopped out of this position I will be a more aggressive seller from 2827/2845 with a 2853 stop.
EUR/USD
What a day as the Euro having just missed my 1.1870 sell level with a 1.1852 high print before having a huge Downside Key Day Reversal with the Euro falling nearly 280 points as one long position after another got taken out. Unfortunately I was part of that process as after the Euro traded lower to my average buy level of 1.1652 I was stopped out of this position at 1.1595 and I am now flat. The Euro has strong support at the May 29 low of 1.1510 and today I will again look to buy the market on any dip lower to 1.1495/1.1535 with a 1.1460 stop. Despite the massive downside move yesterday I still do not want to be short the Euro at this time.
September Dollar Index
Yesterday the Dollar traded the whole of my sell range for an average short position of 94.30. I am still short and today I will leave my stop unchanged at 94.85. The Dollar had an upside Key Day Reversal yesterday which is obviously bullish and as a result I will now raise my T/P level on this position to 94.15.
September DAX
Thankfully we had no sell level in the DAX yesterday as the market rallied nearly 400 points off its intra-day low. Unfortunately the DAX just missed my buy level before rallying after the easier stance taken by the ECB in relation to raising rates. It is amazing that after nearly 10 years of low rates that the Euro-Zone economy is still weak as stated by Dragi yesterday in his press conference, yet stock markets continue to probe new highs. This is a dangerous game and will end badly buy as I have been saying for the last two years until we get a sell extreme that lasts for more than a few days these equity markets are still a buy on dips. Today I will move my buy level higher in the DAX to 12950/13020 with a 12880 stop. Despite the DAX trading severely overbought I still do not want to be short the market at this time.
September FTSE
Frustratingly the FTSE just missed my 7570 buy level by a few points before having a large 150 point rally into the close and I am still flat. Just like the DAX above, thankfully we had no sell levels in this market. The late sell-off in Cable also helped the FTSE to rally. Today I will now raise my buy level to 7615/7660 with a 7575 stop. I still do not want to be short the market at this time.
Dow Rolling Contract
On a day when the NASDAQ made yet another new all-time closing high the Dow faltered. This is what I call negative divergence and could be a pointer to the weaker price action that I am looking for next week once we get the Quarterly Expiration out of the way this evening. Today I will leave my buy level unchanged from 24950/25090 with the same 24880 stop. Despite the negative price action all week I still do not want to be short the Dow at this time.
September NASDAQ
The NASDAQ traded higher to my 7280 sell level. I am still short and today I will only add to this position on any further move higher to 7340 with a now slightly higher 7375 stop. The NASDAQ is severely overbought and has massive overhead resistance at the 7400 area. If I am stopped out of this position I will be a more aggressive seller from 7410/7460 with a 7495 stop. I still do not want to be long the market at this time.
September BUND
The Bund rallied hard yesterday after the ECB’s non action with the market just missing my initial buy level and I am still flat. Today I will now raise my buy level to 159.90/160.30 with a 159.55 stop.
Gold Rolling Contract
Gold finally closed over 1300 after a more volatile trading session than we have witnessed over the past two weeks. I am still flat the market and today I will now raise my buy level to 1288/1295 with a 1281 stop.
Silver Rolling Contract
My long 16.95 Silver position again worked well with the market trading higher to my revised 17.14 T/P level ahead of the ECB announcement and I am still flat. Today I will again look to buy the market on any dip lower to 16.80/17.10 with a 16.45 stop.
Recent Comments