Dogma designed by bureaucrats for central bankers means they must aim for inflation to measure 2 per cent over the medium term. Once again Japan has failed miserably, June CPI excluding fresh food (the preferred measure in Japan) came in today at a 0.6 per cent increase over the year, in turn, the lowest reading in two years. If one were to also exclude energy the annualised increase would be 0.5 per cent. Since 1990 the 2 per cent target has been met – briefly – 4 times only, and in 2009 it dropped to minus 2 per cent. It just goes to show that they have little idea as to how exactly one targets inflation, and that cutting interest rates is like pushing on a piece of string.
The Financial Times reports today that mandarins in Whitehall are worried about a Brexit backlash should Boris Johnson become PM. When he resigned as foreign secretary one diplomat said of him: ‘’unpredictable, gaffe-prone, inconsistent, unfocused, we were delighted to see the back of him’’. Now all 5,500 senior officials working on and around that street are concerned about their future as many question the modus operandi.
DAX 30
Despite yesterday’s little hammer on Fibonacci 38 per cent support, bearish momentum remains stady.
SHORT TERM TRADER: Short at 12530; stop above 12500. Target 11850.
POSITION TAKER: Short at 12385; stop above 12665. Target 11600.
FTSE 100
Still holding support at 7500 while momentum remains fractionally bearish.
SHORT TERM TRADER: Short at 7550; stop above 7625. Target 7200.
POSITION TAKER: Short at 7515; stop above 7625. Target 7100.
S&P 500
Holding around the psychological 3000 level while the MACD is a tad bearish.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
BRITISH POUND/US DOLLAR
Yesterday’s rally reversed all of Tuesday’s damage creating a 3-candle morning star combination at the bottom of our potential broadening base. It also cut out all bearish momentum and maybe it’s time for sterling bears to get a dose of their own medicine. Beware of another bout of short-covering.
SHORT TERM TRADER: New long at 1.2525; stop below 1.2385. Target 1.2750.
POSITION TAKER: Square.
EURO/US DOLLAR
Decent daily range yesterday as the market looks to find its way out of the double bottom (letter W) formation.
SHORT TERM TRADER: Long at 1.1240; stop below 1.1180. Target 1.1340.
POSITION TAKER: Square.
GOLD
Ichimoku moving averages are helping this latest leg higher and the cloud has started rising more strongly.
SHORT TERM TRADER: Stopped out at a loss.
POSITION TAKER: Stopped out here too.
