Intraday Market Thoughts Archives

تعرفوا على توجهات الداوجونز و الداكس في تقرير مفصّل واطّلعوا على أخبار الأسواق المالية بشكل عام في الفيديو التالي

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A pair of important US data points missed expectations in what has been an under-appreciated trend. The latest round Brexit negotiations crack open a window for a compromise deal. Bitcoin hit the Premium long target at 5270 from the 3650 entry. Cryptos are not a regular occurrence in our Premium service. But the opportunity to buy 3 months ago was impossible to miss. The long US CRUDE OIL Premium trade has been closed at 62.30 from the 54 entry. Below is the latest on the econonomic surprise indices for the US and Eurozone.

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Most market watchers understand that the US economy is outperforming most of the developed world this year, but few acknowledge that numbers so far this year are disappointing. The economic surprise index from Citigroup measures how economic indicators have done relative to expectations. At the moment, the US is trailing every major economy at -57, which is the lowest since mid-2017.

The streak continued on Wednesday with ISM non-manufacturing at 56.1 compared to 58.0 expected. That's the lowest since August 2017. ADP employment was at +129K compared to the +175K consensus and was the worst since Sept 2017.

Neither of these indicators is particularly worrisome with both still at healthy levels, especially for this point in the cycle, but the disappointment isn't talked about often because it has been shadowed by this year's strong run-up in equities. If the trend continues for a few more weeks, that could change and may play into the theme of seasonal USD weakness in April that we highlighted earlier this week.

What's masked the disappointment is weakness elsewhere. Leaks suggest Italy will downgrade its growth forecast to just +0.3% this year and the consensus is a meagre +0.1%. The German and French economies have stumbled and Britain remains plagued by Brexit.

Talks between May and Corbyn got underway Wednesday and the comments afterwards were tentatively positive. At the same time, Parliament narrowly voted in favour of a bill that would block a no-deal Brexit. That gives the EU the ability to force the UK into a long extension if May and Corbyn can't put together a deal in quick fashion.

من المؤكد أنكم تعرفون الآن أن أحد النماذج المفضلة لدي في التحليل الفني هي تكوين الرأس والكتفين. اليوم، سأوضح لكم كيف ساعدنا هذا التشكيل على التنبؤ بعمليات رابحة في أسعار النفط و”بيتكوين”، تم إصدارها من قبل شهرين. التحليل المفصل

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Crude oil is flirting with the 200-day moving average as OPEC tightens the market and the US squeezes Iran. The US ADP employment report and ISM non-manufacturing index are both due up next. All currencies are up against the US dollar except for the yen. AUD leads the way.  Our long US crude oil Premium trade entered at 51-54 remains in progress.

ماذا بعد جني الأرباح؟ (فيديو المشتركين)

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Year-to-date, US crude oil is the 2nd highest performing commodity up 38%, behind gasoline's 46%. Crude is now flirting with several key technical levels that will be pivotal in the days ahead. The main one is the 200-day moving average. It was broken in WTI on Tuesday but sits just above the Brent high of $69.57.  Next is psychological resistance at $70.00 and just behind that is the Aug 2018 low (now resistance) at $70.30. If those break, watch the 61.8% retracement of the Q4 plunge at $72.68.

It's increasingly clear that Saudi Arabia is determined to tighten global supplies. They've nearly halted exports to the US and OPEC is pumping at four-year lows. Saudi officials were frustrated in September when the US granted sanctions waivers to Iran's biggest customers but news on that front may also be bullish with the US's envoy to Iran saying Tuesday that with crude prices still relatively low, they were on the 'fast track' to curbing exports to zero.

Investment in oil is low this year and speculators remain deeply skeptical of crude. Even with the jump so far this year, there is little enthusiasm in the market. A rise to Brent at $70 will likely trigger some producers to hedge but that may just stretch out a rally towards later in the year.

Another spot we have been watching closely is Bitcoin. Ashraf has been touting longs for weeks (see below) and the 15% rally added to the upside. What's unclear is what was behind the rip in cryptocurrencies. There has been non-stop speculation but the only coherent thing we've seen is talk of a $100m order but that still doesn't explain why someone would flood the market with bids.

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Looking ahead, the ISM non-manufacturing index is a key report to watch in the day ahead. The US economy has sent out confusing signals including on Tuesday when core durable goods orders were soft once again. Also note that US drugstore giant Walgreens reported same-store sales down 3.8% y/y in Q1 as earnings get underway. The consensus for ISM is a dip to 58.0 from 59.7. The ADP employment report is expected at 175K from 183K.

The US dollar leads against all currencies, while the pound shifted from being the top performer in most of Monday until the final hours when otdropped by a full cent following UK Parliament's indicative votes in rejecting all options supporting a smooth Brexit. We note some of the historically strong seasonal trends in April. Thursday's Premium Long in DAX30 was closed yesterday for 250-pt gain, while today's Bitcoin high print at $5100 means our existing Bitcoin Premium long is up 40% since entering at $3600 in Feb. The Premium video below details our existing and future trades.

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All four indicative votes late on Monday as a Labour whip on Customs 2.0 failed. It had been a good start to the week for the pound after the Markit PMI beat estimates but it was all dashed in moments when the votes were revealed.

Conservative whip Boles raised the stakes afterwards as he quit the party. Earlier in the day, a Conservative lawmaker also reversed course and said that if MV4 came to a vote he would switch and cast a ballot against it.

Aside from the mess in the UK, global markets started the month in an upbeat mood on the rise in the China PMI. The S&P 500 gained 1.2% as a sea of green swept across international markets and 10-year Treasury yields rose 9 bps to 2.50%.

The strong start to April for global equity markets shouldn't be a great surprise for seasonal watchers. April is one of the top months of the year. Other particularly strong trends (historically speaking):

It's the strongest month for oil, natural gas and (not surprisingly) the Canadian dollar.

It's the best month for the euro over the past decade.

It's by far the best month for the pound.

The US dollar tends to be weak, which may relate to a multi-year struggle for US stats agencies to seasonally adjust Q1 data but in 2018 (and presumably this year) they may have fixed it.

Global indices extend Friday's momentum into the new week and month thanks to data showing Chinese manufacturing PMI entering into expansionary territory for the first time since September in a sign that stimulus measures are working. The Canadian dollar was the top performer on the week and the quarter as it capped off March with a surprise climb in GDP.  More Brexit drama looms. US retail sales follow shortly. A new Premium trade has just been posted.

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The 30% rally in Chinese stocks since the start of the year is telling but the latest economic data also help to show that a massive wave of lending unleashed by policymakers is working. The official manufacturing PMI rose to 50.5 from 49.2 in March. That's better than the 49.6 consensus and the first reading above 50 since September.

There were rumors of an RRR cut on Monday but the PBOC responded and explicitly ruled it out. Still, optimism about a trade deal with the US is high and the Shanghai Composite rose 3.2% on Friday along with a 0.7% rise in the S&P 500.

The Australian dollar opened higher to start the week but has so far failed to benefit from better sentiment but it's a big week for AUD with the RBA meeting and federal budget both coming on Tuesday.

The Canadian dollar has fared better but that's largely because of the rebound in oil prices. It was also helped on Friday by a report showing +0.3% m/m GDP growth in January compared to 0.0% expected. WTI finished the week above $60 for the first time since November.

The focus in the week ahead will undoubtedly remain on Theresa May and Brexit. Weekend reports suggested she hasn't given up on her deal yet and will seek another meaningful vote. Up first is another round of indicative votes in parliament on Monday. Don't forget the US jobs report on Friday.

CFTC Commitments of Traders

EUR -80K vs -78K prior GBP -9K vs -14K prior JPY -62K vs -59K prior CHF -27K vs -27K prior CAD -40K vs -48K prior AUD -54K vs -52K prior NZD 0K vs -1K prior

The short position in the euro grew only marginally but it's now the most-extreme since December 2016.