U.S. Equities rose toward all-time highs, Gold rallied and the US Dollar fell as comments by Jerome Powell cemented market bets for an Interest Rrate cut this month. Treasuries were mixed. Equities that had slumped since Friday’s strong jobs report rallied back to intraday records after the Fed chairman signalled a willingness to lower rates, citing a slowing global economy and trade issues. Minutes from the Fed’s June meeting confirmed an inclination among officials to cut rates soon. Gains faded as Powell testified to Congress, with financial shares leading the pullback. The S&P 500 briefly topped 3,000 for the first time. Overnight, Asian stocks climbed alongside U.S. Equity Futures after comments by Federal Reserve Chairman Jerome Powell cemented market bets for a rate cut this month. As I go to press both the NASDAQ and S&P Futures Markets are now trading at new all-time highs.
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Powell’s remarks came ahead of two days of testimony in Congress on the Economic and Policy Outlook. With both equities and bonds sitting on outsize gains since the start of the year, it’s unclear what further impetus they can get given that traders are already discounting a cycle of interest-rate cuts. The S&P 500 rose 0.5% to close at 2,993,while the Dow Jones Industrial Average advanced 0.3%, and the Nasdaq-100 Index gained 1% to a record high. Meanwhile in Europe both the Stoxx Europe 600 Index and German DAX closed 0.2% lower.
Here is a summary of the main changes in F.X Markets:
The Bloomberg Dollar Spot Index fell 0.3%.
The Euro climbed 0.4% to $1.125. This morning we are opening higher again at $1.1275 in London.
The British Pound halted a drop to a two-year low as data showed the U.K. economy rebounded in May with Cable closing 0.4% higher at $1.2520.
The Japanese Yen added 0.4% to 108.448 per dollar.
The yield on 10-year Treasuries fell as low as 2.04% after climbing above 2.10% for the first time in a month before settling around 2.06%. Two-year rates slumped while longer-dated bond yields rose. In Europe, strong manufacturing data from France and low demand at an auction of German Bunds weighed on government debt. As a result, Germany’s 10-year yield climbed five basis points to -0.31%.
The Bloomberg Commodity Index climbed 1.8%.
West Texas Intermediate crude surged 4.4% to $60.35 a barrel.
Gold futures rose 1.3% to $1,419 an ounce, having traded to an intra-day low of $1385.50.
This morning on the Economic Front we already had the release of German CPI which came in as expected with a rise of 0.3%. At 9.30 am we have the UK Financial Stability Report and this is followed at 10.00 am by a speech from Bank of England Governor Carney. Next, at 12.30 pm we have the ECB Minutes from last month’s meeting. At 1.30 pm we have U.S. CPI and the Weekly Jobless Claims. Finally, at 3.00 pm Fed Chair Powell testifies to Senate Banking Committee.
Meanwhile the Fed’s Williams, Bostic and Barkin are all speaking after Powell at 4.10 pm. 5.15 pm and 5.30 pm respectively.
September S&P 500
The continued idea of buying near every dip in the S&P works extremely well as we head into a crucial period for the market given the Central Bank Meetings of both the ECB and Fed later this month. Unfortunately the S&P just missed my 2965 buy level before rallying 35 Handles on Powell’s pre-released Testimony yesterday lunch-time. I am still flat and today I will now raise my buy level to 2980/2990 with a 2973 stop. The S&P has strong resistance from 3020/3030 and I will be a seller in this area with a 3038 tight stop.
The Euro rose to my 1.1235 T/P level on Friday’s 1.1225 long position and I am now flat. Today I will again look to buy the market from 1.1200/1.1240 with a 1.1165 stop. If I am taken long and subsequently stopped out of this position I will be an aggressive buyer from 1.1080/1.1120 with a 1.1035 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 buy level slightly to 95.80/96.20 with a 95.35 stop.
My DAX plan worked well with the market trading lower to my 12355 buy level before rallying to my 12395 T/P level as yet again the DAX managed to hold the key 12280/12340 support level. Today I will be a buyer on any dip to this area with a 12225 stop.
I am still flat the FTSE with the market falling short of my 7505 initial sell level by 5 points overnight. I am bullish of the Pound per yesterday’s commentary and if Cable rises as I expect then we should see a lower FTSE. Today I will leave my 7505/7545 sell level unchanged with the same 7575 stop.
Dow Rolling Contract
I have had the correct view in the Dow but just like the S&P above the market missed my buy level yesterday by a small margin before rallying to just shy of 27,000. I am still flat and I will now raise my buy level to 26620/26770 with a 26530 stop. The Dow has strong resistance from 27170/27320 and I will be a seller in this area with a 27430 wider stop.
The NASDAQ closed at new all-time highs yesterday as the market looks to break the 8000 resistance barrier. I am still flat and today I will again raise my buy level to 7800/7860 with a 7745 stop. The market has resistance from 8020/8070 and I will be a seller in this area with a 8115 stop.
The BUND got hit hard yesterday closing below the key 173.00 pivot point which should now act as resistance. Today I will lower my sell level to 172.80/173.20 with a 173.55 stop.
Gold Rolling Contract
Unfortunately Gold just missed my 1383 buy level with a 1385.50 low print before rallying to an overnight high of 1427. If Gold breaks the 1450 which is a Double Top for now then we will see an acceleration to the upside. Today I will raise my buy level to 1395/1405 with a 1385 stop.
Silver Rolling Contract
I am still flat Silver and I will now raise my buy level to 14.70/15.10 with a 14.45 tight stop.
After I posted yesterday morning Cable traded at or below my 1.2460 long position given anyone who wanted to buy the market plenty of time to do so. Subsequently the Dollar weakened with Cable trading to an overnight high of 1.2540. I covered my long position at my revised 1.2518 T/P level as emailed earlier to my Platinum Members. Today I will again look to buy the market from 1.2420/1.2480 with a 1.2380 same stop. If I am taken long I will have a T/P level at 1.2549.