More of the same for currencies and bonds on Friday, the US dollar continuing to leak lower alongside US Treasury yields. Latest news out of Washington helping maintain the bearish dollar tone was the resignation of white House press secretary Sean Spicer, after telling President Trump he vehemently disagreed with his appointment of Anthony Scaramucci, a New York financier, as his new communications director. US stocks went out with a whimper Friday, the S&P – 0.04% for a fall of 0.3% on the week. The VIX made a new post-1993 record closing low of 9.36 (-0.22 on the day and -0.15 on the week). In contrast, the latest leg up in the Euro took a fresh bite out of European stocks, the Eurostoxx 50 off 1.37% and down 2.1% on the week.
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For anyone following my Platinum Service it lost 15 points on Friday and is now ahead by 712 points for July, having made 1023 points in June, 1071 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.
In G10 FX, both the Australian Dollar and Swedish Kroner were the only two currencies to buck the trend of a falling US dollar, in the Aussie’s case thanks to Guy Debelle’s comments after I posted early Friday morning making clear both that the points for July, having made higher rates weren’t on the radar here and that a lower AUD is desirable. In Index terms the DXY lost another 0.48% to 93.858 and BBDXY -0.26% to 1161.86 (92 and 1150 are the critical technical levels here). DXY is 1.36% lower on the week and the BBDXY 0.9%.
Meanwhile, the AUD/USD ended NY -0.58% at 0.7916 (back from its intra-week high of 0.7989 and still up just over 1% on the week). The NZD and JPY just about tied for top place on the G10 scoreboard, NZD/USD +0.76% to 0.7454 and USD/JPY -0.70% to ¥111.13. EUR/USD gained 0.28% to 1.1663 and is 1.68% up on the week. It was not moved much by a Reuters source story that ran during the London morning that European Central Bank policymakers see October as the most likely date to decide on the future of the ECB’s asset buys and consider December; an option flagged by staff, as too late.
GBP/USD (Cable) gained 0.18% to 1.2997 but is the only currency to lose ground against the USD last week (-0.77%). USD/CAD fell 0.4% to 1.2539, broadly in line with moves elsewhere after a small downside CPI surprise but upside Retail Sales surprise.
In rates, US Treasury yields continue to leak lower, 2s – 1.2bp to 1.342% (-1.6bps on the week) and 10s -2.2bps to 2.238% (-9.5bps on the week. Bunds lost 2.4bps to 0.506% and were down 9.1bps on the week.
In commodities, crude oil fell on Friday after a report OPEC crude supply this month will be the highest since December as members including Saudi Arabia and Nigeria increase shipments, according to tanker-tracking firm Petro-Logistics SA. The Baker Hughes weekly US rig count fell by 1 to 764. WTI fell by $1.00 to $45.77 and Brent by $1.20 to $48.06. Gold gained $9.40 to $1,254.90 to be $27.40 up on the week. Iron ore fell by 90 cents to $67.14 and versus Wednesday’s high of $70.24, but still ends the week with a gain of $1.40.
This morning on the Economic Front we have German, Euro-Zone and US Manufacturing PMI and Services/Composite PMI at 8.30 am, 9.00 am and 2.45 pm respectively. Finally at 3.00 pm we have US Existing Home Sales.
Later at 5.00 pm Frank Smets who is the ECB Director General For Economics speaks in Munich on the ECB’s Monetary Policy since 2014.
September S&P 500
Despite the VIX making New All-Time lows I emailed my Platinum Members not to push the downside for the S&P even though the political situation in Washington worsens by the day. The reason being is the FOMC Meeting on Wednesday. I am still flat the S&P and today I will now raise my buy level to 2456/2462 with a 2451 stop. I will also raise my sell level slightly to 2482/2488 with a 2493 stop. As each days goes by, we are getting closer to a major top in this market but again until we get a sell extreme that sticks there is no point in try to be short this market for more than a few hours.
In hindsight I should have cut my average 1.1610 short position early Friday morning instead of waiting to be stopped out at my 1.1670 stop and I am now flat. Given how overextended the Euro is trading having risen from a low of 1.0340 from the first trading session of 2017 to Friday’s high, I am now looking for a reversal to develop. The next resistance level is the 2015 high at 1.1710 and today I will leave my second sell level unchanged from 1.1715/1.1755 with the same 1.1785 tight stop. Given the positivity of the price action over the past two weeks I will now look to buy the Euro on any dip lower to 1.1540/1.1585 with a 1.1510 stop.
September Dollar Index
After I was stopped out of the Euro the Dollar traded lower to my initial 93.85 buy level. I am still long and as I emailed to my Platinum Members I will only add to this position on any further move lower to 93.50 with a higher 93.20 stop.
The DAX has been my savior all week as the market again traded lower to my 12320 buy level before thankfully rallying to my 12355 T/P level and I am now flat. Subsequently the DAX got hammered for a 170 point sell-off shortly after the US Markets opened as the DAX certain does not like the strength of the Euro. Today the DAX is oversold and due a bounce and I will now look to buy the market on any dip lower to 12110/12170 with a 12060 stop. Despite the negative price action I still do not want to be short the market at this time.
Unfortunately the FTSE just missed my 7470 sell level on Friday before getting hit hard and I am still flat. Today I will now lower my sell level to 7445/7475 with a 7505 stop. I still do not want to be long the FTSE at this time.
Dow Rolling Contract
The Dow continues to trade weakly with large negative intra-market divergence against both the S&P and NASDAQ. It is surprising how weak the Dow is trading when you consider the softness of the US Dollar. Today I will lower my sell level slightly to 21650/21720 with a 21770 stop. Again if I am taken short and subsequently stopped out of this position I will be a more aggressive seller on any further rally higher to 21850/21920 with the same 21980 stop.
Finally the Bund traded higher to my 162.45 sell level. As I had no interest in staying short over the weekend I emailed my Platinum Members to exit any short position at 162.35 and I am now flat. Given the extent of the sell-off in the Bund over the past few weeks I believe that any rallies in the Bund will be short-lived and today I will again look to sell the Bund on any rally higher to 162.55/162.85 with a 163.10 tight stop.
Gold Rolling Contract
Gold traded higher to its next resistance level from 1256/1266. I am still flat and I still do not want to chase this market higher. For this reason I will leave my buy level basically unchanged from 1226/1234 with a 1220 stop.
Silver Rolling Contract
Unfortunately Silver just missed my 16.25 buy level with a 16.31 low print before accelerating higher. As I prefer to be a holder of Silver rather than Gold I will now raise my buy level to 16.05/16.35 with a 15.75 stop.