Yesterday was a rather uneventful trading session for most of the major currencies, with the possible exception of Sterling. The Pound was being bought in the lead up to the release of the August CBI trends survey, holding on to those gains in its aftermath, GBP/USD this morning knocking on the door of 1.32, at 1.3195 as I go to print. Sterling (and other non-USD majors) might well have pushed on, but for a strong report on US housing (see below). The AUD this morning is trading within recently familiar ranges, at 0.7615.
For any of my UK members who may be interested I am doing a special all-day trading seminar over the Non-Farm Payrolls in London on September 2nd 2016. I will be assisted by Paul Wallace who is a trader that I have done a lot of joint presentations in both Dublin and London over the past 12 months. Paul is a very engaging and interesting speaker and together we will try and take you through how to trade markets live over an important economic indicator. If anyone is interested in this not to be missed event in my opinion you can check the details out on the following link:
https://summer2016londonlivetradingday.eventbrite.com
For anyone following my Platinum Service for only the second trading session of 2016 that none of my calls were hit yesterday. The Platinum Service is still ahead by 1055 points for August having made 1682 points in July. The previous three months saw gains of 2550, 1532 and 2175 points respectively. Since I started this Platinum Service in June 2015 it has averaged a monthly gain of over 2100 points.
The UK CBI industrial trends survey for August revealed total orders came in at -5, barely changed from -4 in July when the market was expecting a print of -10. Bear in mind that when you look at this survey, even -4/-5 levels of the past two months are in fact better bar one month than any reading so far this year, averaging -11 in the first half of the year. It would be difficult to say then with any conviction that UK industrial orders have been hit in the aftermath of the Brexit poll. Even on the export side, CBI export orders had worsened measurably to -22 in July from -14 in June, but even that July level was not out of kilter with year to date experience. In August, the reading was -6, up from -22 (and a two year high for export orders), a sign that UK industrial companies are seeing with better market conditions and/or getting some boost from a more competitive sterling. The CBI reported some increase in selling prices.
As far as industrial market conditions on the Continent were concerned in August, the preliminary estimates of Eurozone Manufacturing PMI for August were virtually steady, at 51.8 from 52.0, almost hitting the unchanged consensus. Germany’s also had a small two tenths miss. The Zone’s Services PMI increased modestly from 52.9 to 53.1, slightly beating consensus as did the Composite index, by one tenth. Nothing to see here for the market from these releases.
The US though had a very strong month for New Home Sales in July. Sales surged 12.4% with some major regions having the best sales since before the GFC, a sign of a resilient labour market and near record low 30-year mortgage rates below 3½%. The USD could make only the most modest gains though, also with little change in US yields, even though US equities rose ¼% and oil was higher. US home builder stocks rose 1.84%, so clearly the report was seen in a positive light for that sector.
This morning on the economic front we have German GDP at 7.00 am. At 9.30 am we have UK BBA Loans for House Purchase. This is followed at 2.00 pm by US House Price Purchase Index and the FHFA House Price Index. Finally at 3.00 pm we have Existing Home Sales.
September S&P 500
This lack of volatility is very frustrating as the market continues to go on hold ahead of the Yellen speech in Jackson Hole on Friday at 3.00 pm. Despite the McClellan Oscillator again closing in negative territory the S&P manged to close higher. I am still flat the S&P and today I will now raise my buy level to 2178/2184 with a 2172 stop which is just below last Monday’s low print. Given the fact that the S&P tends to rally into a major event I still do not want to be short the market at this time.
EUR/USD
Given the strength of the US New Home Sales yesterday I would have expected the US Dollar to rally but know it continues to tread water above its key support at 1.1240 and below the nine month trend-line at 1.1350 which continues to act as strong resistance. I am still flat the Euro and today I will lower my buy level slightly to 1.1245/1.1275 with a 1.1220 tight stop. I still do not want to be short the Euro at this time.
September Dollar Index
I am still flat the Dollar and today I will now lower my sell level to 95.15/95.45 with a 95.70 stop.
September DAX
The DAX traded in a very narrow range yesterday and I am still flat. With most traders still on summer vacation in Europe volumes remain low. Today I will raise my buy level to 10470/10520 with a 10425 stop. Despite the market having strong resistance at the 10650/10700 I do not want to be short the market at this time.
September FTSE
The FTSE just missed my 6810 buy level before trading higher yesterday and I am still flat. Today I will raise my buy level slightly to 6800/6830 with a 6765 wider stop which is just below the key 6770/6800 support level.
Dow Rolling Contract
I am still flat the Dow and as I have already raised my buy level above in the S&P I will leave my buy level unchanged in the Dow at 18410/18470 with the same 18340 stop. I am still concerned with the continued negative print for the McClellan Oscillator as internally this market is not strong despite all the main US Indices trading within a hair of their all-time highs. Despite all these worries I do not want to be short the Dow until we see a sell-extreme first.
September BUND
The Bund just missed my initial buy level at 167.30 with a 167.36 low print before spending the rest of yesterday trading higher. I am still flat and today I will lower my buy level slightly to 166.90/167.20 with a 166.55 stop.
Gold Rolling Contract
Gold continues to trade in a narrow range as the key 1310 support level holds despite Silver breaking below its key 19.20 support level on Monday. Today I will leave my buy level unchanged at 1313/1321 with the same 1305 stop.
Silver Rolling Contract
Silver is trying to stabilise after its 11% fall over the past six weeks. I am still flat and today I will leave my buy level unchanged at 18.20/18.60 with the same 17.75 stop.
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