Yesterday European equities opened with a risk off tone following news that Gary Cohn would resign as President Trump’s top economic adviser. The risk off theme continued for most of the day, but news from the White House just after 6.00 pm, that there is a potential for tariffs exemptions based on national security, has triggered a reversal on the risk off moves. US equities paired back earlier losses, with the Dow closing down just 0.33% having been 1.5% lower at one stage while the S&P closed flat. Meanwhile US Treasury yields are higher and the US Dollar gave back some of Tuesday’s gains.

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For markets Mr Cohn’s presence in the White House was seen as a pro market/free trade advocate, but now his departure has raised concerns that the last adult has left the room. So markets reaction to Cohn’s resignation looks to be reflecting fears that trade protectionist activists in the administration (Ross, Navarro, Trump himself) now have much more leverage with not a lot of opposing voices to offer an alternative outcome. The news of trade tariffs exemptions are encouraging for countries such as Canada, Mexico and even Australia, but the potential for more rather than less tariff for China and Europe remains the key risk.

Until Tuesday the imposition of trade tariffs was not a big deal for US equities, but news of Cohn’s resignation ended the S&P 500 four day winning streak. Multinationals mostly exposed to trade and largely represented in the Dow have fallen the most while domestically focused small caps (S&P600 Small) are up 1.1%. Earlier in Europe, equities fluctuated between small gains and losses before closing higher (Stoxx Europe 600 + 0.4%), gains in technology were only partially offset by declines in the auto and basic resources sectors.

In Index terms the US Dollar is a little bit stronger (DXY +0.04 and BBXDY +0.09%) and looking at G10 currencies the greenback is notably up against the CAD and NOK and a little bit softer against JPY. Yesterday the initial reaction to Cohn’s resignation news saw USD/JPY fall from 106.19 to 105.46, but now after the White House comments USD/JPY is heading higher again and currently trades at 106.12.

Unsurprisingly, given ongoing NAFTA negotiations, CAD and MXN were the big losers during the London session yesterday. The Mexican Peso managed to settled around the 18.80 mark, but the Canadian Dollar came under further downward pressure following a dovish tone by the Bank of Canada. The Bank left the cash rate unchanged at 1.25% and although it repeated its commitment to moving cautiously with further rate hikes, it also added some concerns about trade noting that recent developments have become ‘’an important and growing source of uncertainty’’. That all changed after White house spokeswoman Sanders said that there could be tariff carve outs based on national security adding that these exemptions could extent to Canada and Mexico. CAD has almost entirely reversed all of its losses over past 24hrs and now trades at 1.2890 and the Peso is also rallying and currently trades at 18.70.

The Australian Dollar traded softer after yesterday’s weaker than expected Q4 GDP (0.4% and 0.5% exp.), but now following the latest news from the White house, the pair is currently trading at 0.7824, essentially unchanged over the past 24hrs. NZD resilience has been a feature over the past 24hrs, the Kiwi showed little impact to the risk aversion tone and now is also little changed after the news this morning. NZD currently trades at 0.7283.

US Treasury 10y yields are little changed at 2.88%, after trading to a low 2.84% during the London session yesterday. The 10y note is seemingly caught between the prospects of trade tariff induced higher inflation and safe haven demand as the equity market reassess the potential impact from Trump’s protectionist agenda.

While Trump and Co are stealing all the headlines, the big news in commodities has been the 2% drop in oil prices. Exxon, the world’s biggest publicly-traded oil producer, said that it plans to significantly increase spending over the next five years, breaking ranks with belt-tightening rivals, in an effort to more than double earnings by 2025 (Bloomberg). The rest of the commodities complex also had a difficult session with coal prices (-1.7%), iron ore (-1.36%) and copper down 0.85%.

Lastly re US trade tariffs news, Treasury Secretary Steven Mnuchin said he recognizes the risk of retaliation against the U.S. for steel and aluminium tariffs the Trump administration plans to impose but still believes the move will benefit American workers. So as I have been saying in recent reports, the US will also hurt from trade tariffs, but is likely that other countries will hurt more, hence Trump’s strategy is to force others to compromise.

Today the Economic Front is all about the ECB Meeting at 12.00 pm followed by the Dragi press conference at 1.30 pm. The ECB will publish a new set of forecasts and my expectations are for the Governing Council to talk enthusiastically about the robust pace of economic expansion, ongoing reduction of slack and confidence that inflation will converge to target. In terms of ECB guidance, I think the most likely statement change, if any, will be to remove the pledge that the ECB stands ready to increase asset purchases if the outlook becomes less favourable. I still remain of the view that main changes in guidance are unlikely before June.

Also at 1.30 pm we have US Weekly Jobless Claims and Canadian Housing Starts.

March S&P 500

Yesterday was a frustrating trading session with the S&P missing my 2692 buy level with a 2694 low print before rallying initially to a rebound high at 2723 which was just shy of my 2725 sell level before falling 24 Handles to a low of 2699. Subsequently the S&P did hit my 2725 sell level before having a small 5 Handle drop and as I did not want to have a short position on board overnight I emailed my Platinum Members to exit any short position at 2722 and I am now flat. In hindsight we should have just bought the S&P yesterday morning as there was no way the US traders were going to leave such a huge ‘’open Gap’’. Remember all ‘’Open Gap’s for the S&P eventually get filled. Ahead of the key Non-Farm Payrolls tomorrow I am expecting a quieter trading session with the risk that this market pushes higher after we get Dragi and the ECB out of the way. Today I will now raise my buy level to 2704/2714 with a 2697 stop. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer on any further dip lower to 2682/2692 with a 2675 stop. I do not want to be short the S&P at this time.


I am still flat the Euro as we wait for Dragi’s press conference. There is a fair chance that he may try to talk the Euro lower and today I will now lower my buy level slightly to 1.2290/1.2330 with a 1.2250 stop. I still do not want to be short the Euro at this time as I wait patiently for a move higher to my 1.26/1.28 target level where I will be more interested in putting on a more macro short position.

June Dollar Index

Shortly after I posted yesterday morning the Dollar traded lower to my second buy level at 89.35 for an average buy level at 89.55 before trading higher to my revised 89.60 T/P level as outlined in yesterday’s commentary. Today I will again look to buy the Dollar on any dip lower to 88.95/89.35 with a 88.60 stop.

March DAX

Thankfully we had no sell levels in the DAX yesterday as the market just took off to the upside shortly after I posted yesterday morning. Yesterday’s move higher has to be respected as yet again anyone shorting the DAX has a short window to get out before the buy the dip returns. The DAX has strong support from 12110/12170 and today I will be a buyer in this area with a 12060 stop.

March FTSE

I am still flat the FTSE which just missed my buy level before rallying helped by the continued weakness in Sterling. Today I will move my buy level higher to 7070/7110 with a 7035 stop. The 7060 level is key support as a break and close below here tomorrow evening is a major sell signal with an initial target level of 6920.

Dow Rolling Contract

Thankfully we had no sell level in the Dow yesterday as the market reversed all of Tuesday night/Wednesday morning’s aggressive sell-off. I am still flat and today I will now raise my buy level to 24550/24695 with a 24470 stop. I still do not want to be short the Dow ahead of Payrolls tomorrow.


I am still flat the NASDAQ and today I will now raise my buy level to 6810/6860 with a 6760 stop. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer from 6670/6715 with a 6630 tight stop.


No change as I am still a buyer on any dip lower to 156.05/156.45 with a 155.70 stop.

Gold Rolling Contract

Frustratingly Gold just missed my 1322 buy level with a 1322.20 low print before rallying and I am still flat. As I am back long Silver I will now lower my buy level slightly to 1307/1315 with a 1299 stop.

Silver Rolling Contract

As I am expecting Silver to make a tradeable bottom soon I went ahead an bought Silver yesterday at a price of 16.66. I am still long and will only add to this position on any move lower to 16.25 with a 15.90 stop. My T/P level for this long position is 17.05.