Yesterday was a risk-on trading session which helped see some support return for the US Dollar with the Bloomberg Spot Dollar Index closing up 0.34% (the DXY by 0.46%), while both the Swiss Franc and the Japanese Yen seeing the larger declines. The driver has been US politics and enlivened talk on tax reform. News out of Washington has been tweaking the market’s interest in some renewed political momentum developing around the Trump/GOP tax reform agenda. House Speaker Paul Ryan has been saying that the entire tax reform bill could be rolled into one bill, making it procedurally easier. US political website Politico reports that Trump’s top aides and congressional leaders have made “significant strides in shaping a tax overhaul, moving far beyond the six-paragraph framework pushed out in July”. There has been agreement to include a onetime low tax rate for US companies to bring back earnings from overseas and the article says there’s a “broad consensus” on some of the best ways to cut individual and corporate tax rates.
To mark my 1400th 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 15 points yesterday and is now ahead by 964 points for August, having made 1096 points in July, 1023 in June, 1076 in May, 1376 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 1700 points.
The USD has been on the nose till now positioning short and not at all pricing for tax reform. Any material sign of legislative progress as opposed to talk would certainly be USD-supportive. The AUD sits back at 0.7911, at the bottom end of its recent trading range. There has been nothing startling on the commodity front over the past 24 hours, iron ore prices down 0.35%, metallurgical and steaming coal both a little higher, but base metals mixed. Oil and gold both eased.
As an exception to the stronger USD session, the CAD has risen by a net 0.20% against the big dollar, strengthening after the release of stronger than expected core (ex-auto) Retail Sales for June, up 0.7% after a 0.1% decline in May and expectations of only +0.1%. The Canadian Dollar though has given back some of those gains on subsequent USD support. A tick up in oil prices also helped the CAD, the market expecting to see slimmer weekly inventories in the US. On the subject of oil and the medium to longer term outlook for prices from a bullish standpoint, an Economic Letter published by two economists from the San Francisco Fed came to the conclusion that demand out of China would likely see –even on moderate growth assumptions – large increases and big support for world prices.
The Germany/Eurozone ZEW Survey of investor sentiment for August came and went without any market impact, the Germany survey “Current Situation” index actually a tick stronger than expected, but expectations lower (as did the Eurozone’s) in the wake of the stronger Euro and auto industry scandals. ECB Vice President Vitor Constancio (ex Governor of the Banco de Portugal) has been speaking but not speaking about QE tapering but at a conference on inequality. He was quite gloomy on prospects for reducing inequality among advanced economies. He mentioned technological developments, automation, artificial intelligence, organisation of labour markets and of firms all in the direction of an aggravating inequality.
The UK CBI Trends Survey for August was another positive surprise for UK manufacturing, orders up from 10 to 13 and not far short of June’s +16 post-Brexit high, also the at decade highs. The Survey seemed to halt the decline in the Pound for now.
US data was light weight from a market sensitivity perspective, with House Prices and the Richmond Fed Manufacturing Survey, house prices a little softer than expected but the Richmond survey showing still solid growth in that region.
This morning on the Economic Front we have German, Euro-Zone and US Manufacturing PMI at 8.30 am, 9.00 am and 2.45 pm respectively. At 12.00 pm we have US MBA Mortgage Applications and this is followed at 3.00 pm by US Home Sales and Euro-Zone Consumer Confidence.
Shortly after the markets open at 8.00 am ECB President Draghi is speaking in Germany. Unless he drops a bombshell giving greater clarity as to when the ECB might commence reducing its QE programme, there’ll be more interest in the preliminary August Euro-Zone PMIs, the market looking for another batch of equally strong readings for the Manufacturing and Services sectors. He’s then doing a Phil Collins of 32 years ago, jumping on a plane and flying across the Atlantic to Jackson Hole, Wyoming, speaking there on Friday after Fed Chair Janet Yellen.
September S&P 500
Thankfully we had no sell levels in any of the four main Indices that I cover as the warning of the improving McClellan Oscillator finally filtered through to the main Indices which erased most of last week’s loses as yet again any short position got slammed. One of the most reliable technical signals that I follow is the MO which continues to work time and again. The MO closed last night with a negative 47 reading which was a big improvement on Tuesday’s 126 print Yesterday the S&P had a low print of 2429.25 which missed my 2426 buy level before rallying to close over 2454. Given the importance of this rally and the fact that the S&P closed over 2450 is bullish. Today I will now raise my buy level to 2441/2447 with a 2436 stop. I still do not want to sell the S&P at this time as I want to see how the market reacts at the key 2465/2475 resistance level.
EUR/USD
The Euro also missed my initial 1.1740 buy level with a 1.1745 low print before rallying and I am still flat. Today I will now lower my buy level slightly to 1.1670/1.1710 with a 1.1640 stop.
September Dollar Index
The Dollar Index has been a consistent winner for me all year. Yesterday my latest large long 93.30 position was filled at my 93.45 T/P level and I am now flat. If Trump can some-how get his Tax Reform in place then the US Dollar has the potential for a large rally to correct a large portion of its 12% fall so far since making its high in January at 103.80. Today I will again look to buy the Dollar on any dip lower to 92.90/93.20 with a 92.60 stop.
September DAX
The lower Euro certainly helped the DAX to have a huge rally yesterday with the market missing my 12030 buy level before rallying over 200 points. Yet again the DAX is poised to test its key 12300 resistance level which if it can close over here then we could see an acceleration higher. I am still flat and today I will now raise my buy level to 12100/12160 with a 12040 stop.
September FTSE
Unfortunately the FTSE missed my 7295 buy level with a 7314 low print which is frustrating as this was the third consecutive trading session that the FTSE missed my buy level by a few points before subsequently rallying and I am still flat. With Sterling so weak there is just no pint in been short the market especially as we have a UK Bank Holiday on Monday. In light of yesterday’s strong move higher I will now raise my buy level to 7305/7335 with a 7275 tight stop.
Dow Rolling Contract
I am kicking myself for not holding on to Tuesday’s 21630 average long position especially with the Dow trading over 300 points higher than the 21598 low print from that session. Thankfully we had no short position given the extent of this rally. The Dow has strong resistance from 21970/22040 and today I will be a seller here with a 22080 stop. I will also raise my buy level to 21750/21810 with a 21705 stop.
September BUND
No change as I am still a seller of the Bund on any rally higher to 164.70/165.05 with a 165.35 tight stop. Yesterday the Bund traded in a narrow range as we wait for Dragi’s speech at 8.00 am.
Gold Rolling Contract
The rally in the equity markets saw Gold trade lower. I am still flat and today I will now lower my buy level slightly to 1268/1275 with a 1263 stop.
Silver Rolling Contract
Yesterday was a frustrating trading session with Silver also missing my initial 16.85 buy level with a 16.87 low print before rallying back above 17.00. Today I will leave my buy level unchanged from 16.55/16.85 with the same 16.35 tight stop.
Recent Comments