The AUDUSD dipped below the 72c mark yesterday amid the ongoing weakness in Oil and bulk commodities. Just after lunch the currency traded down to 0.7192 at the same time that Brent crude fell below $40 a barrel for the first time since 2009. Later in the session, a rebound in the Brent Oil to $40.7 helped the AUD recover some ground taking it back above 72c to the USD. Looking at G10 currencies performance over the past 24 hrs, commodity linked currencies are sitting at the bottom of the leader board. The NOK is the worst performer, down 1.38% followed by the CAD and AUD at -0.74% and -0.72% respectively. Safe haven currencies have outperformed with the Swiss Franc and Euro, the strongest currencies.
For anybody following my New Platinum Service it made 70 points yesterday and is now ahead by 522 points for December. The previous six months saw gains of 1510, 1600, 2833, 2195, 1810 and 3045 points respectively. If anyone is interested in my new Platinum Service please email me on bryan@tradernoble.com for details.
Concerns about oversupply and waning demand for a range of commodities have weighed on core global equity indices with energy and mining stocks leading the selloff. China’s trade data released yesterday appears to have caught the markets attention. While imports fell by less than expected (- 8.7% vs -11.9), more attention has been given to the weak exports numbers and its reflection of subdued foreign demand. These concerns were further compounded yesterday with Anglo American announcement of a suspension of its dividend along with a cost cutting and restructuring plan amid soft demand for commodities and over supply. Rio Tinto also announced further cuts to capital expenditure. Following the news, shares in Anglo fell by more than 12% while Rio’s share dropped 8.4%.
Despite the weakness in equities, core global yields were little changed. 10y Bunds fell by 1.1bps to 0.569%, 10y UK Gilts were up by 1.9bps to 1.82%. US Treasuries have gained 2.8bps and are currently trading at 2.236%
Data wise, in Europe the second estimate of quarterly GDP growth confirmed the slowdown from 0.4% in Q2 to 0.3% in Q3. Weaker net exports were seen as the main culprit for the softer number. In the US, the NFIB index of small firms’ sentiment and activity fell to 94.8 from 96.1; below consensus of 96.4.The data suggest some loss of momentum, even though the labour market component has remained strong. In a similar vein, the October JOLTS job openings came at 5383, marginally below the 5500 expected, however it still remains close to historical highs suggesting demand for workers will remain robust over the medium term.
BoC Poloz said the Central Bank still forecasts the (Canadian) economy will continue to pick up speed in 2016 and 2017, with a projected return to capacity “around mid-2017.” Poloz speech comes amid growing concerns over Canada’s economy given recent weakens in oil and question marks on China’s economic prospect.
This morning on the economic front we already had the release of the German Current Account and Labour Costs which came in better than expected. On what is a very quiet day for economic releases the only US data that we have is Wholesale Inventories at 3.00 pm.
December S&P 500
Unfortunately my S&P plan did not work out yesterday on what can only be described as a wild trading session with lack of liquidity again a major problem. Shortly after I posted the S&P started to fall hard with the S&P hitting my 2065 buy level before stopping me out of this position at 2058 and I am now flat. I did not re-buy the S&P yesterday preferring instead to be long the Dow especially with the Dollar continuing to weaken after last week’s Key Week Reversal in both the EUR/USD and the Dollar Index. The McClellan Oscillator closed weaker last night with a negative reading of -177 so we are getting near levels where the MO is indicating a short-term buy. Normally the S&P rallies on the Wednesday in the week before Expiration of the Quarterly contracts and with the Fed Meeting also next week this is why I am so reluctant to go short the US Stock market. For these reasons I will look to buy the S&P on any dip lower to 2053/2058 in small size with a wider 2046 stop which is just below last Friday’s post NFP low print. Despite the negative price action I do not want to be short the S&P at this time.
EUR/USD
I am not having much luck with my Euro buy levels with the market again missing my 1.0830 buy level yesterday by 10 points before having a nice 100 point rally and I am still flat. If you look at the Daily chart you can see the Euro has put in a double bottom at last Aprils’s 1.0493 low and Thursday’s post ECB Meeting low print at 1.0523. In my opinion we may have seen the low for the Euro for a long time especially with the level of shorts against the Euro going into the ECB Meeting at near record levels. If anybody has US Assets that they want to hedge I would use any dip in the Euro to do so. Today I will raise my buy level to 1.0850/1.0880 with a 1.0825 stop which is just below yesterday’s low print.
December Dollar Index
My Dollar plan worked well yesterday as shortly after I posted the Dollar traded higher to my 98.70 sell level before having a nice 60 point sell-off overnight which enabled me to cover this position at my 98.45 T/P level and I am now flat. Today I will again look to go short on any rally higher to 98.50/98.80 with a 99.10 stop.
December DAX
My DAX plan did not work out as shortly after lunch the DAX traded lower to my 10710 buy level before stopping me out of this position at 10650 and I am now flat. This morning the DAX is trying to rally and I will lower my sell level to 10810/10860 with a 10895 stop. Given how strong the Euro is trading I do not want to be long the DAX at this time.
December FTSE
The FTSE plan worked well yesterday as shortly after I went long at 6145 I covered this position at my revised T/P level at 6165 and I am now flat. Late yesterday the FTSE tested the bottom of its Daily Bollinger Band and Williams Index and is trying to re-bound this morning as both Gold and the Mining stocks try to recover from their latest bloodbath. Today I will again to buy the market on any dip lower to 6115/6140 with a 6085 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
Unfortunately my long 17670 Dow position was stopped out at 17610 again showing how important it is to have stops in the market with the Dow subsequently falling to a 17485 low print. In an email to my Platinum Members I re-bought the Dow rather than the S&P at 17520 and after a nice rally was able to cover this position at my 17650 T/P level and I am now flat. Despite the crazy bearish volatility yesterday I believe the Dow is a buy as long as it can hold support at the 17400/17470 support level. Today I will look to go long again on any dip lower to 17500/17560 with a 17440 stop.
March BUND
Shortly after the Equity markets started to fall I was stopped out of my short 158.40 position at 158.80. Subsequently I went short again at 158.90 and I have just covered this position at 158.60 and I am now flat. Today I will again look to go short on any rally higher to 158.80/159.20 with a 159.50 stop.
Gold Rolling Contract
My long 1072 Gold position worked well yesterday as shortly after lunch Gold had a nice spike higher to my 1079 T/P level and I am now flat. Today I will again look to buy Gold on any dip lower to 1065/1072 with a 1058 stop.
Silver Rolling Contract
No change as I am still long at 14.40 with the same 13.90 stop.
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