The US Dollar is stronger against most currencies and the AUD has given back all of yesterday’s gains amid overnight softness in metal prices. Meanwhile, US Tech shares have rebounded and the UST curve is flatter driven by a move lower in longer dated yields. In other news US Special council has done a Jerry Maguire demanding Deutsch bank to “Show me the Money!!”. Mueller has ordered the bank to provide records of accounts held by President Trump. The move is significant as it suggests the investigation is now directly focusing on the US president.
To mark my 1475th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2750 for my Platinum Service which includes 1 to 4 updated emails throughout the trading day. This offer is open to both new and existing members and if anyone is interested in this offer can you please email me on firstname.lastname@example.org for details.
For anyone following my Platinum Service it made 128 points yesterday and is now ahead by 521 points for December, having made 823 points in November and 657 points in October. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points.
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After trading sideways for most of the previous few days the USD has staged a mini recovery, up against most G10 currencies and also mostly mildly stronger against EM (DXY +0.238% and BBDXY +0.23%). NOK is the outstanding outperformer, up 0.83%, seemingly supported by gains in oil prices. US data released yesterday showed US crude stockpiles decreased for a third week, WTI is +0.4% and Brent is +0.8%.
NZD has been the other outperformer partly retaining Monday’s gains on the back of acting RBNZ Governor Spencer’s speech. The policy message was that the Bank had become more flexible in its inflation targeting approach, revealing a slight hawkish bias, as implicit by the Bank’s projected rate track at the last MPS. NZD met some resistance just over the 0.69 mark and has slipped in overnight trading to 0.6879, still safely within the approximate 0.68-0.70 range the currency has traded in for the last six weeks.
Meanwhile the AUD has had a bit of a roller coaster ride, after been the top G10 performer on Monday, the pair now trades at 0.7580. Yesterday, AUD’s performance was driven by better than expected AU retail sales, solid Caixin China PMIs (Services and Composite) and an unchanged RBA but slightly more positive on the economic outlook. These factors helped the AUD to a high of 0.76545 yesterday, but softness in metal prices has seen the pair reversed all of these gains. Although iron ore prices are little changed, copper and nickel fell just over 4% and aluminium dropped just under 1%. Gold was also softer (-1%), so on aggregate amid a stronger USD environment, the commodity story was the main factor weighing on the AUD overnight.
Sterling has had another rollercoaster session, lurching down as low as 1.3370 before recovering to 1.3440 and back to 1.3400 this morning.
There have been a number of headlines on Brexit issues hitting the screens, with the Irish border issue the key focus at present. This saga has a few more days to run yet.
US data was mixed yesterday, the US Trade Deficit widened in October to a nine-month high on record imports that reflect steady domestic demand. Meanwhile the November Non-Manufacturing ISM print fell to 57.4 from 60.1, below the consensus, 59.0. Still, given how elevated the level was in October (highest since 2005) a correction in November seems reasonable. The Index remains up from the 56.9 average in the first half of this year and 54.9 last year.
As a result we have seen the 2y year rate climbing 0.8bps to 1.83% while 10 year US Treasuries have drifted lower overnight (- 2.7bps) to 2.37% on the back of the weaker US Equity Futures Markets. The flattening of the UST curve remains a focal point amid an increase in conviction of further Fed tightening while 10y UST yields remain unable to make a decisive break above the 2.40% mark.
This morning on the Economic Front we already had the release of German Factory Orders which came in strong with a +0.5% print versus -0.2% expected. At 8.30 am we have German Construction PMI at 8.30 am and this is followed at 9.30 am by Retail PMI. At the same time the Euro-Zone will also release its Retail PMI. This is followed at 1.15 pm by the US ADP Employment Change and this data will be closely watched for any clues ahead of Friday’s Non-Farm Payrolls. Finally at 1.30 pm we have US Non-Farm Productivity and Unit Labour Costs.
December S&P 500
After months and months of a relentless move higher in the S&P the trend may be changing as we are now seeing some selling into the Chicago close which we have not witnessed for many weeks. Yesterday the S&P topped out at 2649 before selling off and this sell-off as continued overnight with the market trading lower to my 2622 buy level before rallying back to a rebound high at 2626. I used this rally to email my Platinum Members to exit any long position at my revised 2625 T/P level and I am now flat. The S&P has strong support at last Friday’s 2605 low print ahead of stronger support from 2590/2600 and a break and close below 2590 could well see an acceleration lower. Today I will now look to buy the S&P again on any dip lower to 2602/2612 with a 2595 stop. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer in front of 2588 with a 2580 tight stop. I will now lower my sell level to 2636/2643 with a 2650 stop.
My Euro plan worked well with the market trading lower to my 1.1820 buy level before rally back above 1.1840 and I used this rally to cover my position at my revised 1.1832 T/P level. Subsequently I got me Platinum Members to re-buy the Euro again at 1.1800 before covering this position for a small gain at 1.1816 and I am now flat. The Euro has strong support from 1.1760/1.1800 and today I will again be a buyer in this area with a 1.1725 stop.
December Dollar Index
No change as I am still a buyer on any dip lower to 92.40/92.75 with the same 92.05 stop.
Finally the DAX gapped lower at the open this morning to my 12920 buy level. As I was not happy with this position I emailed my Platinum Members to exit this position at 12940 and I am now flat. There is no doubt that the pick- up in volatility is really hitting the DAX after months of sideways and narrow price ranges. The DAX has good support at 12820 ahead of strong support at 12700. A break and close below 12700 is a sell signal with a target price of 12100. Today my only interest in buying the DAX is on a move lower to 12730/12795 with a 12685 stop. I still do not want to be short the market at this time.
Overnight the FTSE traded lower to my 7285 buy level before rallying to my 7300 revised T/P level and I am now flat. Given the slight weakness in Sterling the FTSE is holding in better that the other Indices. The FTSE has strong support at 7250 and today I will again be a buyer on any dip lower to 7225/7255 with a 7195 stop.
Dow Rolling Contract
The Dow has had a roller coaster past week with volatility finally picking up. As expected the Dow traded lower to my 24240 buy level which was the ‘’Open Gap’’ from last week before rallying a couple of times back to 24280. I was surprised that we did not get a bigger bounce of this support level and as a result I covered this position at my revised 24260 T/P level and I am now flat. With volatility picking up the importance of my updated emails becomes a more significant factor. Overnight the Dow has got hit hard with the market now trading below 24100. Support for the Dow comes in at last Friday’s 23920 low print and a break and close below here will see a quick move lower to last Wednesday’s post missile launch by North Korea at 23640. Today I will be a buyer on any further dip lower to 23970/24025 with a 23940 stop. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer on any further dip to 23840/23905 with a 23785 stop.
I am still flat the NASDAQ which came close to my buy level after I posted yesterday morning before rallying strongly and I am still flat. This morning the NASDAQ is lower as the market looks to test the key 6190 support level. Today I will now lower my buy level slightly to 6165/6205 with a 6130 tight stop.
Thankfully we had no sell levels in the Bund yesterday with the market rallying strongly on the back of the weaker stock markets. With the Bund having strong resistance from 163.80/164.10 I will be a seller in this area with a 164.35 tight stop.
Gold Rolling Contract
My Gold plan worked well with the market trading lower to my 1263 buy level before rallying so far to a rebound high at 1269. As I have a large long position in Silver I cover my gold position too early at 1264.50 and I am now flat. There is no doubt that most traders are still long Gold as we wait to see if the key 1250/1260 support level is broken. If it does there is the possibility of a quick move lower to the next support range from 1220/1235. Today my only interest in buying Gold is on a further dip lower to 1249/1256 with a 1243 stop.
Silver Rolling Contract
Silver traded lower to my second buy level at 16.10, which has me long at an average rate of 16.25. I must say I am surprised how weak Silver is trading but if you can remember in the last three years both Gold and Silver have made a low in December before seeing an acceleration higher in both metals. Hopefully this December will be no different. Today I will now lower my T/P level on this position to 16.35 and if this happens I will be back with a new update for my Platinum Members.