Today, being Respect-for-the-Aged Day and a national holiday, the Nikkei reports that PM Shinzo Abe is planning to dissolve parliament and call for a general election in October. A final decision will be made after assessing the North Korea situation. The head of a ruling Liberal Democratic Party is probably hoping to capitalise on his rebound in opinion polls and attempt to stem the advance of the Tokyo First Party, which includes Ms Yuriko Koike, Tokyo’s popular governor.
In a report published yesterday the Bank for International Settlements warns that an estimated $13 trillion in foreign exchange derivatives is not being accounted for on bank balance sheets. This is a global problem, where accounting convention allows for these to remain off-balance sheet. The bank also warned of ‘credit market exuberance’ with central banks, via loose monetary policy, contributing to the problem.
DAX 30
A lot more resilient than I had thought, especially with a general election on Sunday.
SHORT TERM TRADER: Stopped out of my short position first thing this morning for a small loss.
POSITION TAKER: Square.
FTSE 100
One cautious step at a time with a weekly close below horizontal support at 7300, for the first time since May. Now sitting on another horizontal level at 7200 which has held for most of this year. The diagonal line is not as important as all diagonals will get broken if we move sideways for long enough.
SHORT TERM TRADER: New short at 7220; stop above 7335. Target 7100.
POSITION TAKER: Short at 7300; stop above 7375. Target roughly 7000.
S&P 500
Inching to a new record high this morning as we sail comfortably through the psychological 2500 level. Overbought yet again.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
BRITISH POUND/US DOLLAR
A weekly Marabuzo, capitalising on Thursday’s one, and a close well above the 50 per cent retracement level as suddenly sterling is most certainly not the world’s most hated currency. This follows on from the previous week’s fairly big bullish candle hinting that there might be a third one this week, making up what’s known as three white soldiers, as all too many rush for the exits. Note that against the euro we have reversed this summer’s losses and are back mid-June levels (£0.8800).
SHORT TERM TRADER: New small long at 1.3585; stop below 1.3375. Target 1.3800 and probably 1.4000.
POSITION TAKER: Long at 1.3195; stop below 1.3225. Decided to hang on and see if we can get to 1.4000 – preferably pronto!
EURO/US DOLLAR
Though still overbought, as it has been all summer, it’s holding up pretty well against a backdrop of increasing political tension in the European Union.
SHORT TERM TRADER: New small long at 1.1945; stop below 1.1800. Target 1.2145
POSITION TAKER: Square.
GOLD
The break above 1300 looks increasingly unconvincing as the commodity channel index looks set to roll over.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
