U.S. Equity Futures fell while European stocks climbed and Asian shares were mixed after the latest China-tariff hikes kicked in. The US Dollar rose alongside gold. Contracts on the three main U.S. Indexes slipped on Monday, a day after President Donald Trump’s duties on $110 billion in Chinese imports came into effect alongside China’s countermeasures. Stocks in Shanghai rose, however, as authorities vowed to support liquidity and growth. Elsewhere in the region, equities in Japan, Hong Kong and Australia declined in thin volumes. The Stoxx Europe 600 advanced for a third straight session, led by financial services, although the index came off its session high. Treasury Futures edged lower while a Dollar gauge increased for the sixth consecutive day. In the U.K., the pound extended losses and gilts rose a day before Parliament re-convenes in a potential showdown over a possible no-deal Brexit. Elsewhere, America’s southeastern coast is braced for Hurricane Dorian, tied as the most powerful storm to hit land anywhere in the Atlantic, after it inflicted colossal damage to the Bahamas.
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Investors are still reeling from a volatile August that saw a collapse in Treasury yields and declines for equities globally.
Futures on the S&P 500 Index fell 0.6% trading at 2900 as I go to press.
The Stoxx Europe 600 Index increased 0.5%.
Germany’s DAX Index gained 0.2%.
The U.K.’s FTSE 100 Index climbed 1.3%, helped by the Pound falling to a new two-year low.
Here is a summary of the main changes in F.X Markets:
The Bloomberg Dollar Spot Index advanced 0.3%.
The Euro decreased 0.1% to $1.0966 and is opening lower at 1.0945 in London this morning.
The British Pound dipped 1.20% to $1.2010.
The Japanese Yen fell 0.1% to 106.34 per dollar.
The Hong Kong dollar was little changed at 7.843 per U.S. dollar.
Argentina’s Government is imposing currency controls to halt the flight of dollars out of the country as it teeters on the brink of default.
Germany’s 10-year yield advanced one basis point to -0.69%.
Britain’s 10-year yield fell five basis points to 0.432%.
Crude oil continued slipping after completing its first monthly drop since May amid fears that the fading global economic growth will hurt fuel demand. Brent Crude fell 0.8% to $58.76 a barrel.
Gold gained 0.4% to $1,526.45 an ounce.
Iron ore jumped 6.4% to $86.60 per metric ton.
This morning on the Economic Front ECB nominated President Lagarde will speak at 8.00 am and this is followed at 9.30 am by UK Markit Manufacturing PMI. At 10.00 am we have Euro-Zone PPI. Next we have US Manufacturing PMI at 2.45 pm. Finally, at 3.00 pm we have ISM Manufacturing and Construction Spending.
September S&P 500
It took a while but finally my S&P plan worked well with the market trading lower to my 2895 buy level with a 2892 low print before rallying to my 2903 T/P level and I am now flat. As long as the S&P can hold the 2880 support area I am still positive towards the S&P especially in the first two weeks of September. The McClellan Oscillator is still in positive territory closing with a +83 print last Friday. We should see more normal trading volumes this week as traders return to their desks after the summer holidays. Today I will again look to buy the S&P on any dip lower to 2882/2892 with a 2874 stop.
Overnight the Euro traded lower to my second buy level at 1.0950 for a now average long position of 1.0975. With the DSI no in single digits the Euro should rally from at or near current levels. I will leave my stop unchanged at 1.0920 with a now lower 1.1010 T/P level. If I am stopped out of this position I will be a more aggressive buyer from 1.0850/1.0890 with a 1.0810 stop. If I am taken long a second time I will have a T/P level at 1.0950.
December Dollar Index
I have now rolled to the December Contract which trades at a 47 point Discount to both the September and Cash Dollar Index. Currently the September Contract is trading at 99.21, having risen for six consecutive sessions, a new two-year high. The DSI for the Dollar is over 90% and today I will be a seller of the December Contract from 99.05/99.45 with a 99.75 stop.
The lower Euro is certainly helping the DAX to rally over the past few days with the market now within touching distance of the key 12000/12100 resistance area. I am still flat the DAX and today I will again raise my buy level slightly to 11740/11810 with a 11685 stop. Despite the above resistance I still do not want to be short the DAX at this time.
Sterling making a new two-year low saw the FTSE rally to close 1.3% higher. This move occurred despite the US Futures Indices falling since that market re-opened on Sunday night. The FTSE is severely overbought and has strong resistance from 7340/7380. I will be a seller in this area with a 7410 stop.
Dow Rolling Contract
I am still flat the Dow as we wait for the U.S Markets to re-open after the Labour Day Weekend. The Dow has strong support from 25910/26050 and I will now lower my buy level to this area with a 25840 tight stop. I still do not want to be short the Dow at this time.
I am still flat the NASADAQ and today I will raise my buy level to 7515/7565 with a higher 7475 stop.
I have now rolled to the December Contract which as you would expect is trading near all-time highs especially with equity markets selling off as I go to press. The Bund has strong resistance from 176.80/177.20 and I will be a seller on any rally to this area with a 177.55 stop.
Gold Rolling Contract
I am still flat Gold and today I will raise my buy level to 1495/1505 with a higher 1487 stop.
Silver Rolling Contract
I am still flat Silver which despite the high DSI is so far refusing to sell-off. This is strange when you consider how strong the US Dollar is trading. Today I will raise my buy level to 17.90/18.30 with a 17.65 tight stop.
From time to time I will make a call on cable especially when I see a decent opportunity. Cable is trading this morning at 1.1980 which is a fresh two-year low. Currently we have the second largest net-short position in history in cable. The only larger position occurred in March 2017, as the Pound started a rally relative to the U.S Dollar until April 2018. As a result I will look to buy cable from 1.1900/1.1950 with a 1.1830 stop. If I am taken long I will have a T/P level at 1.2030.