Having been stuck at rock bottom 1.5 per cent since August 2016, and a central bank banging on about getting it back up to ‘normal’, the Reserve Bank of Australia caved in this morning, joining the growing throng of authorities back-pedalling. Head of the RBA Philip Lowe said, ‘’today’s decision to lower the cash rate will help make further inroads into the spare capacity in the economy. It will achieve more assured progress towards the inflation target’’. James Bullard of the St. Louis Federal Reserve said yesterday that a cut in the Fed Funds rate ‘’may be warranted soon’’ given the trade risks and weak US inflation.
Yesterday Neil Woodford’s biggest fund, the Woodford Equity Income Fund – which two years ago had £10.2 billion under management – suspended trading and froze all redemptions. This follows poor performance and accelerating withdrawals, so that it currently is worth about a third of peak.
DAX 30
Momentum is still bearish despite yesterday’s bounce up to the neckline of the small head and shoulders top that formed in April and May. Yesterday, as the share price of Deutsche bank fell to yet another new record low, JP Morgan ‘helpfully’ said the German bank should stop ‘tinkering’ with its restructuring plans and decide what businesses it will close, reports the daily Telegraph.
SHORT TERM TRADER: Short at 11870; stop above 12200. Target 11325.
POSITION TAKER: New short on Friday’s close at 11700; stop above 12000. Target 11000.
FTSE 100
Back down close to February and March’s lows though momentum is not as bearish as one might imagine. Today the British Retail Consortium reports that May’s retail sales saw the biggest drop on record – admittedly from a very strong showing this time last year. Two Bank Holidays and dry warm weather did not help. Food sales dropped for the first time in 3 years.
SHORT TERM TRADER: Short at 7100; stop above 7320. Target 6875.
POSITION TAKER: Short at 7275; stop above 7320. Target 6875.
S&P 500
Momentum is still clearly bearish despite yesterday’s grim little attempt at a bounce. FAANGS under pressure as the authorities threaten probes into business practices.
SHORT TERM TRADER: Short at 2880; stop above 2845. Target 2720.
POSITION TAKER: Target at 2740 met and took profits. Looking to re-sell shortly.
BRITISH POUND/US DOLLAR
Clawing its way up off oversold levels. Today London will have to content with mass protests, and a speech by Labour leader Jeremy Corbyn, protesting President Trump’s state visit.
SHORT TERM TRADER: Small long at 1.2675; stop well below 1.2600. Target 1.2925.
POSITION TAKER: Square.
EURO/US DOLLAR
Momentum turned bullish on yesterday’s unexpected burst above first trend line resistance.
SHORT TERM TRADER: Long at 1.1195; stop below 1.1100. Target 1.1400.
POSITION TAKER: Square.
GOLD
Overbought as it reverts to its store of value status. Note that the Japanese yen has benefited recently too, trading at just 107.85 to the UUS dollar, its strongest this year and in turn the strongest since April 2018.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
