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Futures

FX Rundown


Euro (June)

Session close: Settled at 1.2285, up 31.5 ticks

Fundamentals: Today’s economic calendar signals that the recent move in the Euro has stretched its limits; Business Confidence data from all regions and most importantly the German Ifo read missed while Case Shiller Housing, Consumer Confidence and New Home Sales all beat expectations in the U.S. The obvious expectation is that the Euro would be lower on todays data set, but instead it finished in the green and about a half penny from the session low. Thursday’s ECB Meeting will quickly come into focus as tomorrow’s economic calendar is quiet on both sides of the pond. We said Sunday and yesterday that the recent move in the Euro should open the door to a more hawkish than expected surprise on Thursday; a relief rally into the meeting would begin to diminish this potential.

Technicals: Price action traded below major three-star support for three short spurts but was unable to remain below this critical level at ... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.

 

 

Yen (June)

Session close: Settled at .92335, down 4 ticks

Fundamentals: The Yen continues to be the casualty to higher U.S Treasury yields, and price action dipped hard to start the session. However, the low came just in front of our major three-star support and price action clawed back to unchanged. Aiding the reversal was equity market weakness; the NQ finished down 2% and lost as much as 3% while the S&P finished down almost 1.5% and lost as much as 2%. Asian equity markets notched a solid session on dovish comments coming out of China, however, look for weakness tonight to further support the Yen trade.

Technicals: Price action traded to a low of .9189 and tested major three-star support at ....  Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.

 

 

Aussie (June)

Session close: Settled at .7599, down 3 ticks

Fundamentals: The Aussie lost ground early last night after CPI missed expectations. However, the U.S Dollar began to stall, and this buoyed the Aussie along with the commodity sector. Still, the recent trend is developing lower and before the session finished this is where the Aussie found itself. Equity market weakness weighed on the currency and if we see the same in Asian markets tonight, it should continue to do so. There is no data tonight.

Technicals: Today’s session high was .7621 but could not garner even a dead cat bounce to test major three-star resistance head on at ...  Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.

 

 

Canadian (June)

Session close: Settled at .78005, up 10 ticks

Fundamentals: The Canadian held ground very well today despite the energy sector and equity markets taking a beating. Positive comments from President Trump on NAFTA and the likeliness of a deal getting done in the next 10 days have buoyed the Canadian in otherwise not so favorable conditions. Crude Oil will be key to watch over the next 24 hours and Bank of Canada Governor Poloz speaks tomorrow a 3:15 pm CT.

Technicals: Price action is testing right into and holding major three-star support at ...  Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.

 

Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.

Visit our website at www.bluelinefutures.com to open an account and stay up to date with our research.

Bill Baruch is President and founder of Blue Line Futures. Bill has more than a decade of trading experience. Working with clients he focuses on developing trading strategies that present a clear objective for both long and short-term trading approaches. He believes that in order to properly execute a trading strategy, there must be a well-balanced approach to risk and reward.

Prior to Blue Line, Bill was the Chief Market Strategist at iiTRADER which followed running a trade desk at Lind Waldock and MF Global.

Bill is a featured expert on CNBC, Bloomberg and the Wall Street Journal as well as other top tier publications. 

Blue Line Futures is a leading futures and commodities brokerage firm located at the Chicago Board of Trade. We work with clients that range from institutional to professional to novice and from self-directed to broker-assisted. No matter what type of trader you are, our mission is simple; to put the client first. This means bringing YOU strong customer service, consistent and reliable research and state of the art technology. 

This article is from Blue Line Futures and is being posted with iBlue Line Futures’ permission. The views expressed in this article are solely those of the author and/or Blue Line Futures and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


17538




Macro

Rareview - The Convergence Trade and Consensus Positioning is at Risk


The primary catalyst for why the US dollar broke its multi-month sideways range is related to economic data, or a slowdown in the “convergence trade.” Put another way, yesterday, sentiment took a big step forward that the breakdown in the “synchronized global growth” narrative became official.

The flash manufacturing PMI for April, as released by Markit, saw the US ahead of the European gauge for the first time since 2015. To put that into perspective, the last time the spread was near zero, the EUR/USD cross was around ~1.10.

After five days of higher prices and the break of a 4-month rectangle, one of the strongest technical patterns, professionals are asking if US dollar strength has legs.

The view of a stronger dollar has received support technically, fundamentally, and operationally.

Technically, the Dollar-Yen (USD/JPY) through 108.00 was the first step. The key resistance levels are 109.35 and the 110.61, the 200-day moving average. However, for a more sustained USD rally, a break of EUR/USD support at 1.2150 is required.

Fundamentally, following recent central bank meetings or softer-than-expected economic data, rate hike expectations for the Bank of Canada (BoC), Bank of England (BoE), and Reserve bank of Australia (RBA) have come down. Additionally, policymakers at each respective central bank have expressed more dovish rhetoric. As a result, the ECB meeting this Thursday is expected to now delay their signal regarding tapering bond purchases to at least July, back from June.

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To see the remainder of today's edition, please sign up for a subscription to Sight Beyond Sight through Interactive Brokers.

Sight Beyond Sight® is a global macro trading newsletter written daily by Neil Azous. With close to two decades of institutional experience across asset classes, Neil interprets the day-to-day economic, policy and strategy developments and provides actionable trading ideas for investors. We invite clients of Interactive Brokers to sign up for a free trial in Account Management. If you are not a client of IB, you can sign up for a free trial by visiting our website.

This article is from Rareview Macro and is being posted with Rareview Macro’s permission. The views expressed in this article are solely those of the author and/or Rareview Macro and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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Macro

Interactive Brokers - Is the Market Correction Behind Us?


Interactive Brokers Chief Options Strategist Steve Sosnick examines whether the market correction is behind us. It may be premature to sound the "all clear".

The analysis in this article is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such investments. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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Macro

BlackRock - Returning to the Old Normal


The market environment in 2018 looks more normal than last year, with lower returns and higher volatility. Richard explains.

Last year was an extraordinary one for markets with strong returns and rock-bottom volatility (vol) across most asset classes. The market environment in 2018 has returned to a more “normal” mix of lower returns and higher volatility. This reflects rising economic uncertainty and less room for growth to exceed expectations.

The chart below illustrates this reduced reward for risk, one of the three investing themes in our Q2 2018 Global Investment outlook. It shows how a hypothetical global portfolio of 60% equities and 40% bonds would have seen its Sharpe ratio, a measure of returns over cash relative to realized volatility, plummet this year (see the orange dot) from 2017 peaks. A key reason: a hefty rise in equity volatility back to more “normal” levels. Volatility was unusually low in 2017, even in the context of low-vol regimes we have seen since 1980. The recent plunge in the Sharpe ratio also comes amid more muted asset returns and rising U.S. cash rates–a product of the Federal Reserve’s gradual monetary tightening.

                              

The euro-zone example

What explains the shifting market backdrop? We see two key factors. First, economic uncertainty has risen as U.S. stimulus and trade policy actions have broadened the range of possible outcomes compared with 2017. Second, we see less scope for growth outside the U.S. to beat expectations. This is reflected in our BlackRock Growth GPS, which points to above-trend global growth in 2018 but shows consensus having caught up with or even overtaken our own measure. Europe provides a good example. Growth expectations there have likely overshot after last year’s unexpectedly strong data. Our GPS suggests the euro-zone should experience decent above-trend growth in the coming year. Temporary factors, such as an inventory unwind, may explain some of the region’s recent disappointing economic data. Yet consensus estimates look too high and may need to revert to more realistic levels, we find.

A bumpy road ahead

This points to a bumpy road ahead for markets, especially when combined with elevated geopolitical risks and slowly rising inflation. Yet we do not believe lower returns and higher short-term volatility spell the end of the equity bull market, now in its ninth year. Nor do we see warning signs, such as a widespread buildup in leverage,that would signal the end of the expansionary cycle. We see synchronized global growth with room to run providing a solid foundation for equities. We see higher interest rates ahead, but plentiful global savings should keep yield rises moderate–even amid rising U.S. bond issuance.

We prefer to take risk in equities over credit. We see market returns being driven by earnings growth, dividends and coupons, rather than rising valuations. This, too, is a return to normal. We prefer equity markets with higher earnings growth, such as the U.S. and emerging markets (EM). In fixed income, we prefer EM debt and short-duration U.S. bonds. The latter’s recent yield increases reflect anticipated Fed hikes and make for an attractive risk/reward trade-off.

Richard Turnill is BlackRock’s global chief investment strategist. He is a regular contributor to The Blog

Investing involves risks, including possible loss of principal.

This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of March 2018 and may change as subsequent conditions vary. The information and opinions contained in this post are derived from proprietary and nonproprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by BlackRock, its officers, employees or agents. This post may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this post is at the sole discretion of the reader. Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.

©2018 BlackRock, Inc. All rights reserved. BLACKROCK is a registered trademark of BlackRock, Inc., or its subsidiaries in the United States and elsewhere. All other marks are the property of their respective owners.

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This article is from BlackRock and is being posted with BlackRock’s permission. The views expressed in this article are solely those of the author and/or BlackRock and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice. 


17528




Macro

Schroders - Why We Are Shifting Gears for a Volatile Environment by Johanna Kyrklund


If the US economy continues to grow through the second quarter, the current expansion from trough to peak will equal and then surpass the second longest on record (106 months recorded between 1961 and 1969). Such figures naturally raise questions about the longevity of the cycle; therefore, we are closely monitoring the "vital statistics" of the US economic expansion and are on high alert for any sign of slowdown.

This is important for investors because the US equity market has been the leader in the bull market which started in 2009. At the beginning of the year we listed a number of indicators we were watching, we provide an update on each indicator below:

  • Our cyclical models continue to point to the "Expansion" phase of the cycle which is typically still positive for markets.
  • Although the US Federal Reserve (Fed) continues to raise rates, it has not surprised investor expectations. The US 10 year yield remains below 3% which is critical for the sustainability of US equity valuations. On top of this despite inflation measures rising more recently they remain in line with forecasts, therefore lowering the risks that the Fed is forced to accelerate their hiking cycle in the near-term. For now, the risk of tightening liquidity too quickly is not evident.
  • The shape of the US yield curve has been stable over the quarter and does not point to recession risk for now.
  • The US dollar has remained weak as we predicted and this has supported global liquidity and our emerging market positions.

Trade wars or clever strategy?

Talk of "trade wars" has been the main surprise of 2018. The topic has taken centre stage recently with the US announcing its plans to impose tariffs of up to 25% on $60bn of Chinese exports. We see this as part of a bargaining strategy on the part of the US administration, which has been quick to grant exemptions from its earlier steel tariffs and has been wary of putting tariffs on goods which the US consumer would notice; for example iPhones.

These moves suggest that trade wars are not the end game here. Instead, it is likely to be a deal with China that can be held up as a victory ahead of the US mid-term elections in November.

We may be wrong of course and the recent shift in White House personnel is a cause for concern. If we see a more sustained shift towards protectionism, we would view this as a challenge for growth expectations as global trade has been the main factor driving the global expansion over the last year. We are less concerned about the inflationary consequences of protectionism as we believe that the effects would be lagged and complex. Indeed, more generally, we continue to be more worried about growth disappointing on the downside than inflation surprising on the upside.

All in all, we are very conscious that we are in the late stages of the cycle and market prices have moved to reflect a lot of our views: US and emerging market equities have outperformed, the dollar has weakened and the Japanese yen and emerging market currencies have strengthened.

We cannot afford to be complacent and have therefore increased diversification in our portfolios across asset classes. Based on our indicators, the traffic light is still green but expensive valuations pose a speed limit to returns and we have shifted our strategy down a gear.  

Technology under scrutiny

On another note, the technology sector has also come under political scrutiny of late with Facebook being in the eye of the storm. This is a not a sector we have emphasised due to concerns about lofty valuations against a backdrop of rising rates. Recent concerns about greater regulation only underpin our concern about valuation.

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Please remember past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. Source: Schroders. Thomson Reuters data for the MSCI World and the MSCI World Total Return (including dividends) in US dollars correct as at 07 March 2018.

This article is from Schroders and is being posted with Schroders’ permission. The views expressed in this article are solely those of the author and/or Schroders and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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