Archives of “November 2019” month

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Record closes for all three US indices to end the week

  
Analysis, Global Indices, US Market
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The Dow above 28000 for the first time ever.  Indices close at record all time high levels.

The major indices are closing at records. The Dow hits 28,000 for the 1st time ever and looks like my close above that level as well. The S&P index and NASDAQ index are also trading at record levels and closed at the highs.  It is hard to get any better than that.
The closing numbers are showing:
  • The S&P index up 23.73 points or 0.77% at 3120.37. That is the high for the day. The low for the day was down at 3104.60
  • The NASDAQ index is up 61.81 points or 0.73% at 8540.82. That too is the high for the day. The low for the day reached 8506.79.
  • The Dow close up 222.45 points or 0.80% at 28004.69. Yes. it too is at the high for the day.  The low for the day reached 27843.54.
Below are the percentage changes of the major North American and European indices today (along with their low to high ranges).
The Dow above 28000 for the first time ever.  Indices close at record all time high levels.  

For the week, the Dow was the biggest gainer of a sample of major indices. The Shanghai composite index was the biggest decliner at -2.52%.

The weekly percentage changes for the major global stock indices

EURUSD moves to new session highs.

  
Analysis, Forex

Looks toward a test of the 200 bar MA on the 4 hour and 38.2% retracement

The EURUSD has extended the run to the upside and is getting closer to the next target area defined by the 200 bar moving average on the 4 hour chart at 1.1058 and the 38.2% retracement of the move down from the November 4 high at 1.10597.  A swing area is also up near the 1.1062-63 area.
Looks toward a test of the 200 bar MA on the 4 hour and 38.2% retracement
Early in the session the pair moved above its 200 hour moving average for the 1st time since November 5. The pair also extended the very narrow trading range for the week on a move above the Monday high at 1.10426. The range for the week is now up to 65 pips (remember the old days when the range was near 100 pips a day?)
Yesterday and on Wednesday, the price tested the 61.8% of the move up from the October 15 low. That was also a swing low from 1.09908.  The low price reached 109885 before bouncing.
EURUSD

Wilbur Ross: Trump has not yet indicated any change on 15 December tariffs

  
  Analysis

Further comments by Ross

  • But there is still plenty of time for that
  • There will be another trade call with China today
  • We are much farther along with details of trade deal with China
It feels like these comments are recycled from those we have seen earlier in the year, except with a change to the timeline. That said, markets are still staying hopeful as the Trump administration continues to stroke the risk mood over the past few sessions.
Frankly speaking, I’m more interested to see what China has to say in all of this. They have been eerily quiet during the whole week.

Wilbur Ross: US-China trade deal will be done ‘in all likelihood’

  
Analysis, Economy
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Comments by US commerce secretary, Wilbur Ross

  • There is a very high probability that a deal will be reached
  • Chinese agricultural purchases and execution of those are an issue
  • Huawei not an appropriate player in the US 5G space
  • US will have deal with China or keep tariffs
Rinse and repeat, rinse and repeat. Yet, markets continue to lap it all up. USD/JPY touches a new day high of 108.78 and looks to challenge the 100-hour moving average now.
Looks like risk trades just got a shot in the arm ahead of US trading.

IEA sees ‘hefty’ oil supply cushion building in 1H 2020

  
Analysis, Crude

EA comments in its latest report on the oil market

Oil

The agency says that it expects global oil markets to remain “calm” next year as soaring non-OPEC production and high inventories will keep consumers comfortably supplied.

Adding that non-OPEC supplies will increase by 2.3 mil bpd next year, almost twice the expansion in global oil demand. That is a 100k bpd upgrade from its estimate last month.

“The calmness is supported by a well-supplied market and high inventories. This may continue into 2020 because non-OPEC countries will grow their production significantly.

The hefty supply cushion that is likely to build up during the first half of next year will offer cold comfort to OPEC+ ministers gathering in Vienna at the start of next month.

However, a continuously well-supplied market will lend support to a fragile global economy.”

A quick rule of thumb for what’s driving the US Dollar

  
Analysis, Forex

The dollar smile theory

The dollar smile theory

Dollar moves can be tricky to understand at times., as the USD is pushed and pulled by different forces. The dollar is the most widely traded currency, with 70% of all transactions dollar based on a day to day basis. The dollar smile theory was outlined by Stephen Jen, a former currency strategist and economist at Morgan Stanley. He said that understanding the currency movements of the dollar can be illustrated with a smile. That ‘smile’ consists of three distinct reactions:

USD smile theory

Reaction 1: Risk off: Dollar rises

The left side of the smile shows that the U.S. dollar benefits from risk off moves. During times of global concern the USD is considered a safe haven along with the Swiss franc and the yen.

Reaction 2: Economic slowdown and recession

The middle part of the smile. When the Fed begins to reduce interest rates the USD falls. The demand for the USD is reduced and so the USD alls

Reaction 3: Economic growth and risk on

The right part of the smile is when the USD gains value on a hawkish fed and a risk on environment. In an optimistic environment investors are willing to take more risks. The USD gains on higher GDP growth and expectations that the Fed will be increasing interest rates.

USD/JPY sits higher on the day but sellers still hold near-term control

  
Analysis, Forex

USD/JPY buyers have much work to do in order to recapture near-term bias

USD/JPY H1 15-11

The pair is sitting higher on the day as the yen is weaker following renewed hopes of a trade deal from Kudlow’s remarks earlier. The bounce also comes after sellers ran into support around 108.27 in overnight trading.
Despite a slight nudge higher, sellers remain in near-term control as price holds under both key hourly moving averages.
In that sense, price action suggests that markets are a tad more positive on trade talks but not to the extent to fuel a significant shift in the risk mood just yet.
As such, buyers still have much work to do if they are to try and take away near-term control from sellers in the coming sessions.
The first key resistance point is the support-turned-resistance at 108.65 before the key hourly moving averages around 108.88-98 come into play. Those will be the two key levels to watch out for in the event buyers extend the move earlier today.
But as mentioned earlier, markets could yet err on the side of caution if there are no follow-up headlines to bolster the positive narrative from Kudlow.
A case of easy come, easy go may just reinvigorate sellers to test support at 108.27 and then the 108.00 handle next as they continue to hold near-term control.

Economic data coming up in the European session

  
  Analysis
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Eurozone October final inflation reading in focus today

Comic 15-11

Happy Friday, everyone! Hope you’re all doing well as we look to get things going in the session ahead. Risk trades are in a better mood today with some recovery seen in yen pairs and gold is also lower to start the day.

Meanwhile, equities have nudged higher while bond yields are also faring better as the Trump administration talk up hopes of a trade deal.

Looking ahead, there is little on the economic calendar in Europe to really shift the dial so we may be in for a more quiet one barring any major headlines to cross the wires.
1000 GMT – Eurozone October final CPI figures
The preliminary report can be found here. As this is the final release, it isn’t expected to have much – if any – impact on markets as a whole.
1000 GMT – Eurozone September trade balance data
Prior release can be found here. An indication of trade conditions in the euro area region but the data is a bit lagging as this pertains to Q3 economic performance.
1000 GMT – Italy October final CPI figures
The preliminary report can be found here. Focus is on the overall Eurozone release so the report here will matter little, and even more so since this is the final release.
That’s all for the session ahead. I wish you all the best of days to come and good luck with your trading!
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