As of this writing 4:20 AM EST, here’s what we see:
US Dollar: Up at 97.430 the US Dollar is up 148 ticks and trading at 97.430.
Energies: April Crude is up at 33.43.
Financials: The Mar 30 year bond is down 22 ticks and trading at 166.21.
Indices: The Mar S&P 500 emini ES contract is up 45 ticks and trading at 1961.75.
Gold: The April gold contract is trading down at 1229.80. Gold is 90 ticks lower than its close.
Initial Conclusion
This is not a correlated market. The dollar is up+ and crude is up+ which is not normal but the 30 year bond is trading lower. The Financials should always correlate with the US dollar such that if the dollar is lower then bonds should follow and vice-versa. The indices are up and Crude is trading higher which is not correlated. Gold is trading down which is correlated with the US dollar trading up. I tend to believe that Gold has an inverse relationship with the US Dollar as when the US Dollar is down, Gold tends to rise in value and vice-versa. Think of it as a seesaw, when one is up the other should be down. I point this out to you to make you aware that when we don’t have a correlated market, it means something is wrong. As traders you need to be aware of this and proceed with your eyes wide open.
All of Asia traded higher with some exchanges in positive triple digit territory. As of this writing all of Europe is trading higher.
Possible Challenges To Traders Today
- Prelim GDP q/q is out at 8:30 AM EST. This is major.
- Core PCE Price Index m/m is out at 8:30 AM EST. This is major.
- Goods Trade Balance is out at 8:30 AM EST. This is major.
- Personal Spending m/m is out at 8:30 AM EST. This is major.
- Personal Income m/m is out at 8:30 AM EST. This is major.
- Prelim GDP Price Index q/q is out at 8:30 AM EST. This is major.
- Prelim GDP Price Index q/q is out at 10 AM EST. This is not major.
- Revised UoM Inflation Expectations is out at 10 AM EST. This is not major.
- FOMC Member Powell Speaks at 10:15 AM EST. This is major.
- FOMC Member Brainard Speaks at 1:30 PM EST. This is major.
Currencies
Yesterday the Swiss Franc made it’s move at around 9:30 AM EST after the economic news was released. The USD hit a high at around that time and the Swiss Franc hit a low. If you look at the charts below the USD gave a signal at around 9:30 AM EST, while the Swiss Franc also gave a signal at just about the same time. Look at the charts below and you’ll see a pattern for both assets. The USD hit a high at around 9:30 AM EST and the Swiss Franc hit a low. These charts represent the latest version of Trend Following Trades and I’ve changed the timeframe to a Renko chart to display better. This represented a long opportunity on the Swiss Franc, as a trader you could have netted about 20 plus ticks per contract on this trade. We added a Donchian Channel to the charts to show the signals more clearly. Remember each tick on the Swiss Franc is equal to $12.50 versus the $10.00 that we usually see for currencies.
