No one loves the US dollar even the Fed signalling an end to QE didn’t help

July 10, 2014

The market giveth and the market taketh away.

Last night was a giving night for stocks, US dollar bears, gold bulls and holder of long term US Treasuries

Even the obvious message from the Fed in the FOMC minutes is that QE is ending and the road to the normalisation of rates is at hand could help the US dollar or scare the long end of the bond curve nor stock traders. The minutes noted that Fed participants “generally agreed” that its monthly bond purchases would end in October.

Certainly two year Treasuries reacted hitting their highest levels in more than a year. But closing at just 0.5% it is hardly a bear market for bonds. Indeed with US 10 year treasuries closing at 2.55% down 1 point stock traders aren’t worried – at least today.

2’s up and 10’s down = Currency traders non-plussed

So at the close the Dow was up 79 or 0.47% to 16,986. The Nasdaq rose 0.63% and the S&P 500 rose 9 points to 1,973 for a gain of 0.47%.

Respecting the trendline support

In Europe the FTSE fell 0.3% to 6,718. The DAX was 0.36% higher at 9,808 while the CAC rose 0.4% to 4,360. In Italy and Spain stocks rose 0.89% and 0.54% respectively.

The impact on the ASX has been to see the futures market pullback from yesterday’s weakness and the SPI 200 September contract is up 10 points to 5,423.

In Asia yesterday it was an ugly day but it was a day focused on the previous nights US trade so we’d expect a better performance today. That is if Chinese trade data plays ball when it is released at 11am this morning. Yesterday saw the Nikkei open weak but clamber higher to finish down 0.07% but in Hong Kong stocks fell 1.55% to 23,176 while in Shanghai stocks fell 1.21% to 2,039. It seems the weakness might have been on the CPI data which wasn’t bad enough to prompt any further stimulus.

On currency markets the trade continues to confound me with the Euro and Sterling higher at 1.3641 and 1.7155 respectively. USDJPY rallied as well which continues the inverse correlation between the Euro and the Yen that appears to be in evidence most days continued. The Aussie pushed a little higher along with the Canadian dollar and sits at 0.9412 this morning.

Short with a stop above the 138% level

On commodity markets iron ore could not breach important resistance and has reversed overnight with the September 62% Fe fell 90 cents to $95.77 a tonne. Newcastle coal for September has dipped under $70 a tonne finishing at $69.95. Copper dropped a cent to $3.24 lb while in great news for global growth July Nymex crude fell 1.4% to $101.95 Bbl.

Gold rallied $7.80 oz to $1,330 and silver was up 5 cents to $21.14 oz with the big news that a joint bid by Thomson Reuters and the CME is the front runner to host the new Silver Fix but the LME hasn’t given up hope yet. On the Ags corn and wheat both lost a little more than 1% while soybeans rose 0.36%.

On the data front today Chinese trade and Australian employment will make for a super interesting day in Asia before French CPI, UK trade and the BoE interest rate decisions. Tonight is quiete in the US with the usual Thursday fare of jobless claims but little else

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