As mentioned in my earlier report, it is not just the dollar which has fallen against the euro today. The EUR/GBP, for example, has hit a new high on the year as the pound remains under pressure owing to concerns over a no-deal Brexit outcome. The single currency is also holding its own relatively well against the commodity currencies, non-more so than the New Zealand dollar.
All major benchmarks around the world are in the green. Momentum domestically has been undeniable as the S&P 500 closed yesterday at the highest level since Jan. 29 and is nearly 1% from a record this morning. However, it is China that is joining the party with the Shanghai Composite up 2.74%. The yuan is attempting to stabilize, and this aided China’s major index in posting its best gain in two years, cutting its YTD loss to 15.96%.
The S&P 500 is painting too many short side indicators near here to ignore the idea of a weeklys options short call spread 2855/2850 strikes, using under $500.00. The market internals collapsed at lunch, while the indices formed sell-signal candlesticks on many time frames. Prices are beyond my projected highs of the week, and sideways pivots for the month and week are present.
After a five-day losing streak, the euro/U.S. dollar (EUR/USD) currency pair has finally – at least for the time being – put an end to its recent downward trend and was climbing back towards the 1.16 handle. Other major euro crosses were also trading higher, suggesting it was not just the dollar weakness that had helped to underpin the EUR/USD.
Crude oil prices are on the rise as President Donald Trump warns the world that anyone trading with Iran will not be trading with the United States. That pronouncement is directed at the European Union, which issued a statement Monday in Brussels saying, "We deeply regret the re-imposition of sanctions by the U.S., due to the latter's withdrawal from the Joint Comprehensive Plan of Action (JCPOA).
There are no two ways about it: 2018 has been an absolutely brutal year for gold bulls. The yellow metal came into the year with some impressive momentum, rallying from around $1240 in mid-December to hit a peak above $1,360 per oz. by late January, but the proverbial “wheels have fallen off” since then.
A word of caution to anyone who thinks trading is a passive exercise. Yes, Facebook got taken to the woodshed right there in the 618th day of the rally. The stock has not recovered and with a screaming headline at Drudge this morning, it appears they aren’t learning their lesson. They will continue to invite regulators. But that’s a stock market story for a different day down the road.
After minor overnight volatility, U.S, European, Japanese and Hong Kong benchmarks are near unchanged but those from China are deeply in the red. The German DAX took a sweeping hit after a big miss on Factory Orders this morning but has regained positive; Euro weakness is supportive. In an editorial in its state-run newspaper to start the week, China directed sharp comments at President Trump, doubling up on calling him a bully and saying that it is in their best interest to sacrifice the short-term term economics for the larger and longer-term picture.
Crude oil prices are rising. We have a falling U.S. oil rig count and a surprise drop in Saudi oil production, against a backdrop of increasing geopolitical risk. Baker Hughes’ oil rig was countdown two, gas rig count dipped by three.