Another New high for the S&P, the DAX trades over 10,000 but Euro takes a dive

June 10, 2014

Gee whiz this is a tough market – FX volatility is almost non-existent with the top 5 currencies trading in pretty tight ranges by historical standards.

The culprit for this is a lack of important news, or at least important news that is a surprise to the market.

The premise that this is a “Macro Boring” market and I think this is the key to whats going on. Super low rates, QE and nothing – besides maybe the bond selloff – on the horizon to derail the rally.

Regular readers won’t be surprised either that I can’t see what will knock the market over but equally that the minskyite in me is getting nervous – extremely so.

I wonder how George Soros back is feeling??

Anyway at the close in the US it was another day another new all time high for the S&P 500 at 1,956, but it couldn’t hold the highs and drifted back to finish at 1,951 up 2 for a gain of 0.08%. The Dow rose 0.11% to 16,943 while the Nasdaq rose 0.34% to 4,336. Data wise it was light in the US overnight but looking back to Friday non-farm payrolls rose 217,000 which was around what the market expected. This is worth noting in the context of comments overnight, during a speech, from Fed President James Bullard who outlined how close the Fed is to meeting its policy goals.

I’ve sold some S&P 500 this morning at 1948.5 looking for a little run down toward 1,922.

In Europe it was a sea of green with the FTSE up 0.24% to 6,875, the DAX as noted above closed at 10,009 and the CAC in Paris was 0.17% higher at 4,589. In Milan and Madrid the party continues with the FTSE MIB up 0.82% and the IBEX 35 climbing 0.90%. Speaking of Spain the 10 year yield is now below the US Treasury rate – go figure.

It is worth noting Asian yesterday which saw both another Chinese stimulus package for banks which target the rural sector by 50 basis points effective June 16 and a monstrously large year on year GDP rate. Q1 GDP rose  1.6% (versus 1.4% expected) which took the year on year rate to a stunning 6.7%.

All of the above should lead to a better day on the ASX today which last traded up 14 to 5492. Mining stocks were up in London trade but Iron ores was lower once more so its not a linear extrapolation but the topside looks more likely today.

On currency markets the Euro was poll axed last night and is off more than 70 points from yesterday’s trade at 1.3598 – but realistically week on week it is dancing on the spot. The Pound is at 1.6808 and USDJPY is becalmed at 102.545. FX volatility is absent and the Aussie is at 0.9350 this morning.

It’s time for the Aussie to test the recent down trend channel as you can see in the chart below. 0.9365 would be a sign of a break but realistically to get anyone excited 94 cents needs to give way.

Crude is having a scary surge again with the June Nymex contract up 1.7% to $104.54 Bbl this morning while gold is consolidating around $1,250 closing at $1,253 with Silver at $19.05 oz. Copper is going down again and the bulls will be smarting from the sharp reversal off last weeks highs – it sits at $3.05 this morning. Iron ore is also down again with the September contract sitting at $94.50 tonne.

On the data front today we have the Japanese tertiary industry index while in China the CPI will be released along with new loans. At home we get ANZ job ads together with home lending data and the NAB business survey – the most important release in our economy. Tonight its production data in Europe and then the NFIB business index in the US.

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