The doldrums engulf markets again

June 27, 2014

Sometimes traders should walk away from the desk, go for a run, a surf or head to crossfit.

These mental health periods within the day are really important because at other times long days and a dedicated focus are what’s required.

Such is the case at the moment with FX markets becalmed, gold stuck below a huge level, stocks going up and down on the spot and nothing rattling markets sustainable.

It doesn’t mean don’t have stops, bids and offers in the market but it does mean you can relax and enjoy life as a trader.

As you know though I strongly believe volatility transitions and this period will eventually give way to a vol spike – so let’s be alert still.

Anyway overnight  St Louis Fed President James Bullard left traders in no uncertainty in his view that the Fed is at risk of falling behind the curve if unemployment drops.

Bullard is not voting this year but warned rates could be rising by the end of Q1 2015 and said the US economy is “way ahead of schedule” on its employment trajectory.

On that front the jobless claims data printed 312,000 but the 8 week moving average has now fallen to a level consistent with “a clear acceleration in payroll gains to something close to 250K” according to Ian Shepherdson at Pantheon Macro.

Other data showed weaker than expected personal spending of just 0.2% in may against expectations of a rise of 0.4% but income did grow at the 0.4% expected.

So at the close the three big indices in the US were slightly lower but solidly off their lows of the day with the Dow off 22 points to 0.13% to 16,846. The Nasdaq was largely flat down just 0.02% to 4,379 while the S&P 500 lost 3 points to 1957.

Almost there – 1.38 Fibo level suggests a top is near.

In Europe stocks were lower on the continent with the DAX down 0.64% to 9,805, the CAC was 0.46% at 4,440 but the FTSE recovered after UK home builders somehow picked up after BoE Governor Mark Carney announced new macro prudential style rules to limit risky lending and improve financial stability in the UK. At the close of play the FTSE was up 1 point to 6,735.

Locally for stocks in ASX futures trade the September contract up 5 to 5432 bid. It might be difficult for the market to kick substantially higher in trade today given overnight moves offshore but it is worth noting that iron ore rallied hard again overnight up another $1.62 tonne to $96.75.

In Asia yesterday the Nikkei was 0.27% higher at 15,308, the Hang Seng rose 1.45% and Shanghai stocks were 0.67% higher at 2,039 after the debut of three new stocks – which soared – helped sentiment. After a fairly quiet week of data Asia, or at least Japan, is going to be busy this morning with the releases of very important CPI data along with retail sales and jobs data.

In Currency trade it was fairly quiet although Sterling is back above 1.70 with GBPUSD at 1.7022. USDJPY is breaking down ever so slightly at 101.70 and Euro sits at 1.3610.

Biased higher short term but forming a wedge

The Aussie is up marginally at 0.9412. FX is still in the low vol doldrums.

But not iron ore which is continuing to rip higher as noted above. Newcastle coal futures for September delivery were up 25 cents tonne to $70.95. Nymex June crude finished at $105.82 more than reversing the previous days gains. Gold is back at $1,316 oz after a bit of volatility when news of $15 billion in fake Chinese gold deals hit the market. It’s failing this week at a very important trendline which may turn the price lower once again.

Trying to break out

Silver is at $20.86 oz and Dr copper sits at $3.16 lb. On the Ags corn rose 0.4%, wheat 0.87% and soybeans was 1.5% higher.

On the data front the Japanese releases are huge for Abenomics today and tonight we get really important UK GDP as well as French GDP Before EU business and investor confidence. Nothing of note in the US is to be released.

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