Not a huge amount of price action across currencies, equities or bonds over the past 24 hours with most price movement such as there is consistent with the significantly better than expected Non-Manufacturing ISM release. Together with stronger than expected New Home Sales numbers – suggestive of lower mortgage rates starting to gain traction in supporting home buying, the US economy looks to coming back quite strongly after hits related to the Q4 stock market meltdown, January government shutdown and some now all-too-familiar early year weather-related hits to activity.
To mark my 1800th 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 To demonstrate this value, a monthly subscription over the same period would cost 4440 euro in total This offer represents a 38% discount and is open to both new and existing members. If anyone is interested in this offer can you please email me on bryan@tradernoblecom for details
For anyone following my Platinum Service it made 29 points yesterday and is now down 224 points for March, having made 1013 points in February, 1671 points in January, 2803 points in December, 1541 points in November and 2094 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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Events and Currencies
The AUD currently sits almost unchanged on this time yesterday, the biggest influence of the past 24 hours being not the remaining GDP partials nor the RBA, but rather the significant downside surprise in the Caixin version of China services PMI (51.5 from 53.6, in contrast to a very much smaller fall in the previously released official edition).
The latter in turn was more influential on markets than anything coming out of the first day of China’s National People’s Congress (NPC) in Beijing. The latter affirmed a 6-6.5% GDP growth target for 2019 (as previously flagged), CPI targeted at around 3% and a Budget Deficit of 2.8% of GDP up from 2.6% in 2018. In the context of pledges for fiscal policy to be ‘’proactive’’, and announced cuts to VAT rates, Social Security contributions and increased infrastructure spending, this circle is squared by lifting the lid on Special Bond issuance targets for Local Authorities by almost 1tn or the best part of 1% of GDP.
The NPC pledges to keep the Yuan basically stable a commitment that won’t prevent China from agreeing to some form of commitment not to devalue the Yuan against the US dollar as part of a Sino-US trade deal. On monetary policy, ‘’prudent’’ remains the watchword with the overall amount of credit leverage in the economy planned to be little changed, but with more lending proposed for both small and private sector enterprises.
AUD took little notice of either the reaming GDP partial (covering net exports and government spending) but which resulted in NAB downgrading its estimate for GDP today to 0.3% from 0.4% and the market consensus to 0.4% from 0.5.
Certainly the RBA is still seeing the economy though rose-tinted spectacles judging from yesterday’s post-meeting statement, reaffirming its forecast for 3% growth this year despite acknowledging a slower second half of 2018.
Elsewhere in FX we saw the USD pulling back in the last couple of hours of trading earlier strength related to the upside surprise in the Non-Manufacturing ISM (59.7 from 56.7) with big gains for overall activity and new orders, including a five point jump in the export order sub-index, to 55.0 from 50.1. The pull-back in the Dollar Index follows a test of the 97.0 level, which I note has proved to be very toppy in the last few quarters.
DXY is nevertheless 0.2% up on the day, with a 1/3rd of a percent drop in EUR/USD largely to blame. The latter is despite final Euro-Zone Services (and Composite) PMIs proving stronger than the earlier ‘’flash’’ readings. In absolute terms though, they remain very much poorer than their US equivalents, and where one prominent US economist is noting is, on a literal reading, consistent with US GDP growth running at 4-5%!
Sterling is little changed, recovering from an earlier hit on latest Brexit related wobbles (no sign of movement from Brussels on the Irish backstop question) after Bank of England Governor Mark Carney said that the market-implied path for Bank of England rates might not be high enough.
Equities and Bonds
It turned out to be a very session for stocks after Monday’s excessive volatility, with the main US indices showing very minor gains averaging 0.1%. Ditto US bond markets where Treasury yields are very narrowly mixed (less than 1bps different on the day). Essentially, bonds have done a round trip, yields higher out of the ISM report but back to flat in afternoon NY trade.
Not a whole lot of movement here either, though base metals are mostly higher led by 3% jump in nickel, as too are iron ore futures, +1.3%. Oil is touch firmer, Brent crude up 28 cents at $65.96. Gold is 40 cents higher at $1,287.
This morning on the Economic Front we have no data of note from either the UK or the Euro-Zone. At 12.00 pm we have the US MBA Mortgage Applications followed by ADP Employment Change at 1.15 pm which will be closely watched ahead of Friday’s Non-Farm Payrolls Report. This is followed at 1.30 pm by the Trade Balance, while at 3.00 pm we have the Bank of Canada Rate decision. Finally at 7.00 pm we have the Beige Book.
Meanwhile the Fed’s Williams speaks on Monetary Policy at 5.00 pm.
March S&P 500
After Monday’s 53 Handle range the S&P traded in a narrow sideways pattern for all of yesterday’s session and I am still flat. Today I will leave my 2763/2773 buy level unchanged with the same 2755 stop. I will continue to be an aggressive buyer on ant further dip lower to 2732/2745 with the same 2724 stop. Given the strength of the overhead resistance at the 2820 area I will now lower my sell level slightly to 2810/2822 with a 2830 stop.
Yesterday the Euro traded lower to my 1.1290 buy level before having a small 20 point rally and I used this rally to cover my long position at my revised 1.1307 T/P level and I am now flat. The Euro has strong support from 1.1210/1.1260 which must hold or else we could see an acceleration lower. With the ECB Meeting and Dragi press conference to come tomorrow hopefully we will see some volatility after six months of little or no action in this currency pair. Today I will be a buyer on any dip to this support area with a 1.1165 stop.
March Dollar Index
No Change as I am still a seller on any rally higher to 97.20/97.60 with a 98.05 stop. I will also leave my 95.90/96.30 buy level unchanged with the same 95.55 stop.
Despite the fireworks in the US Indices on Monday the DAX has traded in a narrow range all week and I am still flat. Today I will leave my 11420/11490 buy level unchanged with the same 11365 stop.
I am still flat the FTSE with the market never coming close to my buy level which was no surprise given the small sell-off in Cable and I am still flat. Today I will again raise my buy level to 7070/7110 with a 7035 tight stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
No Change with the Dow needing to hold the key 25200 long term support. I am still flat and today I will continue to be a buyer on any dip lower to 25440/25610 with a 25330 stop. Despite the recent sell-off from the 26000/26200 resistance area I still do not want to be short the Dow at this time.
No Change as I am still a buyer on any dip lower to 7040/7085 with a lower 6995 stop.
This morning the Bund opened above my initial sell level at 163.44. As I no longer want to be short the Bund I covered this position at my revised 163.32 T/P level as emailed earlier to my Platinum Members and I am now flat. The 163.00/163.20 area is a key pivot point. Today I will be a small buyer on any dip lower to 162.45/162.85 with a 162.10 tight stop.
Gold Rolling Contract
Gold just missed my 1279 second buy level with a 1281 low print before thankfully having a small rally into the New York close with the market trading at 1290 this morning. Today I will leave my second 1279 buy level unchanged and if this is filled I will have a T/P level at 1290. Otherwise my T.P level on my originally 1296 position remains unchanged at 1297. If any of the above levels are filled I will be back with a new update for my Platinum Members.
Silver Rolling Contract
I am still flat Silver and today I will now raise my buy level to 14.60/14.95 with a 14.20 stop. If I am taken long I will have a T/P level at 15.15.