Positive statements move stocks of the US companies towards historical h...

US stocks pull back ahead of Fed meeting

US stocks closed lower on Monday pulling back ahead of earnings reports and central bank meetings after hitting record highs last week. The dollar weakened slightly. According to the live dollar index data the ICE US Dollar Index, a measure of the dollar’s value against a basket of six major currencies, slipped 0.14% to 97.224. The Dow Jones industrial average lost 0.4% settling at 18493.06 led by Chevron and ExxonMobil as oil fell. The S&P 500 ended 0.3% lower at 2168.48 with nine sectors out of ten finishing in negative territory and only consumer discretionary edging higher. The Nasdaq composite index dipped 0.1% closing at 5097.63. Investors are cautious ahead of the Federal Open Market Committee two-day meeting which starts today followed by the Bank of Japan’s policy meeting on July 28-29. The Federal Reserve is widely expected to leave the interest rates unchanged but investors will be focusing on the Fed’s policy statement for clues about the timing of next rate hike. The yield on the benchmark 10-year Treasury note inched higher less than a basis point to 1.571%. In case the statement highlights improved US economic data and reduction in uncertainty in financial markets the Treasury yields may rise further as investors sell them off in anticipation of an expected rate hike. Today at 15:00 CET May S&P/Case-Shiller House Price Index will be released. The tentative outlook is positive for dollar. At 15:45 CET July Services PMI will be published, the outlook is negative. And at 16:00 CET July consumer Confidence will be released by Conference Board, the tentative outlook is negative. At the same time June New Home Sales will come out, sales of new homes are expected to rise.

European stocks inched higher on positive earnings reports with losses in energy stocks limiting gains as oil prices fell. The euro and the Pound edged higher against the dollar. The Stoxx Europe 600 gained 0.2%, its firs rise in three sessions. Morgan Stanley said the results of 130 earnings reports so far are fractionally more positive with 35% of companies beating consensus estimates by 5% or more, while 28% missing, giving a net beat of 8% of companies. In the first quarter the net beat was 6% of companies. Germany’s DAX 30 index rose 0.5% to 10198.24 after the decline in closely watched Ifo business climate index was less than expected: the Ifo business climate index fell to 108.3 from 108.7 in June instead of expected 107.5. France’s CAC 40 gained 0.2% to 4388.00. The UK’s FTSE 100 lost 0.3% closing at 6710.13. No important economic data are expected today in euro-zone.

Asian stocks are mixed today: Hong Kong’s Hang Seng Index is up 1.1% with Shanghai Composite Index 0.8% higher. Australia’s All Ordinaries Index is up 0.09%. But Nikkei fell 1.4% to two week low as yen strengthened against the dollar after a report Shinzo Abe’s government planned a direct fiscal stimulus of around 6 trillion yen ($56 billion) over the next few years fell short of investors’ expectations. Exporters underperformed, Toyota fell 2.5% and Honda lost 1.89%.

Oil futures prices are recovering today after falling to three month lows on global crude oversupply concerns on Monday. September Brent crude on London’s ICE Futures exchange fell 2.1% to $44.72 a barrel on Monday as the number of active oil rigs rose by 14 to 371 last week, the largest weekly gain so far this year, indicating likelihood of higher US output.

Gold is steady today after spot gold fell 0.59% on Monday ahead of Federal Reserve’s policy meeting starting today. A bullish Federal Reserve statement indicating an increased likelihood of a rate hike later this year will add to pressure on safe haven gold after recent rally in equities.

In anticipation of the publication of GDP data and the Bank of England meeting

The British pound has been recently trading in a narrow range after a 12% sharp decline as a result of the victory of supporters of the country's exit from the European Union in a referendum of June 23, 2016. The main reason for the collapse of the pound was the fear that the Bank of England will expand the program of economic stimulus. Its next meeting will take place on August 4, 2016. Will the British currency strengthen if the Bank of England retains the main parameters of monetary policy?

Last week, two representatives of the Bank of England announced that there is no need to hurry with the rate cut, as political uncertainty after Brexit may lead to slower economic growth. In this regard, we deem that preliminary GDP data for the second quarter of the current year, which will be released on July 27, 2016, will have particular importance. According to forecasts, its growth will remain at the level of the first quarter and will be 2%. Note that the Bank of England current rate is 0,5%, which is much higher than similar indicators of the Fed, the ECB and the Bank of Japan. The decline of the pound was very rapid and it renewed a 30 - year minimum. Theoretically, the pound may be undervalued, as investors had little time for accurate macroeconomic estimates. In addition, the process of the UK exit from the EU may take much more time than it was expected immediately after the referendum.

GBPUSD

On the daily chart GBPUSD: D1 The price has stopped the downtrend on D1 and is moving sideways trying to breach upward from the triangle. The MACD indicator has formed the signal to buy. The Parabolic indicator still indicates sale, but its signal may serve as an additional level of resistance that must be overcome. The Bollinger bands have widen significantly which means high volatility. The RSI indicator is neutral and below 50. No divergence. The bullish momentum may develop in case the British pound exceeds the last fractal high, the upper boundary of the triangle and Parabolic signal at 1,349. This level may serve as a point of entry. The initial stop-loss may be placed below the recently renewed minimum since the mid-80s of the last century at 1, 279. After opening the pending order we shall move the stop to the next fractal low following the Bollinger and Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level at 1, 279 without reaching the order at 1,349, we recommend cancelling the position: the market sustains internal changes which were not taken into account.

Position Sale
Buy stop above 1,349
Stop loss below 1,279

US dollar net longs rise on payroll surprise

US dollar bullish bets rose to $8.0 billion from $4.1 billion against the major currencies during the previous week, according to the report of the Commodity Futures Trading Commission (CFTC) covering data up to July 12. The strong jobs report for June was a surprise which supported the US dollar. Nonfarm payrolls increased 287000 in June after increasing merely 11000 in May. The unemployment rate rose to 4.9% from 4.7% in May but the change reflected a rise in participation rate to 62.7% from 62.6% as more discouraged workers joined the labor force. The continued strength of labor market assured investors US economic recovery has not stalled as a low May payrolls increase led many to worry. The strong June payrolls report revived the chances for a rate hike by Federal Reserve this year at a time when other major central banks are forced to come up with new stimulus measures to boost their economies and stave off deflation. As is evident from the Sentiment table, sentiment deteriorated for euro, British Pound, Swiss franc and Japanese yen. And Australian dollar, Swiss franc and Canadian dollar remained the three major currency held net long against the US dollar.

The bearish euro sentiment continued to deteriorate as the net short position in euro widened at roughly the previous week’s pace rising by $1.7bn to $12.1 bn. The euro accounts for over 70% of gross short position against the dollar. The net short position in euro increased as investors cut the gross longs by 2376 contracts and built the shorts by 7957 contracts respectively. The British Pound sentiment deteriorated ahead of the Bank of England interest rate decision on July 14 with the pace of increasing net short bets in British Pound doubling from previous week as net shorts rose by $0.98bn to $4.9 billion. The net short position in British Pound widened as the gross longs were cut by 5747 contracts and the shorts were increased by 5289. The bullish Japanese yen sentiment weakened significantly with the net long position in Japanese yen falling by $2.1bn to $5.6bn. Investors here too cut the gross longs and increased the shorts by 1673 and 14350 contracts respectively.

The sentiment continued to improve for the Canadian dollar with the net longs rising by $0.4bn to just $1.3 billion. Investors cut both the gross longs and the gross shorts. The bullish sentiment strengthened considerably for the Australian dollar with net longs rising to $1.2 billion from $366 million. Investors built both the gross longs and the shorts. The sentiment continued to deteriorate for the Swiss franc with the net long position narrowing at previous week’s pace falling by $261 million to $0.8 billion. Investors reduced the gross longs and increased the gross shorts.

USDA cuts wo

rld corn production and stocks outlook in US

In its monthly WASDE report for July USDA cut outlook for US corn stocks of previous crop at the end of 2015/16 to 1.701bn bushels. This is 7mln bushels less than in June report. The official estimate was below the range of 1.708-1.907 given by independent analytical agricultural agencies. The forecast of corn stocks of new crop also fell short of expectations. Will the corn prices advance?

USDA believes the world corn production in 2015/16 agricultural season is to be 959.79mln tonnes which is below the 2014/15 reading of 1013.56mln tonnes. This may lead to 15.7% decline in its global export. The main reason of lower production is drought in Brazil. USDA expects the Brazilian corn crops to fall 21.4% this season compared to 2014/15 season. The US meteorologists now forecast the drought in US in second half of July and in first half of August. This may have a negative effect on corn crops in US. US is second to none in global corn production followed by China and Brazil. The main corn importers are Japan, Mexico and South Korea.

Corn

On the daily chart Corn: D1 is correcting up from its 20-month low since October 2014. The Parabolic indicator gives signal to buy which may be used as support level. The MACD has not reversed and continues giving bearish signals. The Bollinger bands have widened a lot which means extremely high volatility. The RSI has left the oversold zone and is below 50, no divergence. The bullish momentum may develop in case corn price surpasses the Wednesday high of 369. This level may serve the point of entry. The initial stop-loss may be placed below the Parabolic signal, the last fractal low and 20-month low at 339. Having opened the pending order we shall move the stop to the next fractal low following the Parabolic and Bollinger signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level at 339 without reaching the order at 369, we recommend cancelling the position: the market sustains internal changes which were not taken into account.

Position Buy
Buy stop above 369
Stop loss below 339

US stocks climb higher

US stock market advanced for the fourth session in a row on Wednesday with the S&P 500 and the Dow Jones industrial average closing at new record highs while oil fell. The dollar weakened: the live dollar index data indicate the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, edged 0.18% lower to 96.299. The Dow Jones industrial average closed 0.1% higher at 18372.12 led by 1.2% rise in UnitedHealth Group shares. The S&P 500 gained less than a point edging up to 2152.43. Energy and consumer discretionary stocks limited broad market index’s gains, down 0.7% and 0.5% respectively. The Nasdaq Composite Index declined 0.3% closing above 5000 level at 5005.73, falling again into negative territory for the year. Treasury prices rose Wednesday as 30-year bonds were sold at a record-low yield of 2.172%. Federal Reserve’s Beige Book, presenting results of anecdotal survey of economic conditions, indicated that US growth from mid-May through the end of June was continuing at a “modest pace” across most of the 12 Fed districts. Wage pressures were "modest to moderate" in most of the central bank's districts and price pressures remained slight. Fed districts also reported some signs of softening in consumer spending but most retained an optimistic outlook. The report helped stocks inch higher with analysts noting that recent better-than-expected US economic data provide grounds for expectations of better-than-expected second quarter earnings. In other economic data US import prices rose 0.2% in June and the US ran a $6 billion budget surplus in June. Today at 14: 30 CET Initial Jobless Claims and Continuing Claims, as well June Producer Price Index will be released in US. At 16:30 CET Natural Gas Storage Change will be released by the Energy Information Agency.

European stock markets slipped on Wednesday ahead of Bank of England policy meeting after rising four sessions in a row. The euro strengthened against the dollar while the Pound fell as newly appointed Prime Minister Theresa May formed the new cabinet. The Stoxx Europe 600 edged 0.1% lower. Italian bank stocks and shares of most oil and gas companies fell. Germany’s DAX 30 index closed 0.3% lower at 9930.71 as Chinese trade data showed imports in June declined 2.3% year-over-year in yuan terms. China is an important export market for German companies. France’s CAC 40 edged higher 0.1% and the UK’s FTSE 100 closed 0.2% lower. Bank of England policy meeting will take place today and the central bank is expected to cut the interest rate to 0.25% from 0.5%. Today at 13:00 CET the Bank of England will announce the interest rate decision.

Asian stocks are edging higher today with Hong Kong’s Hang Seng Index up 0.8% while Shanghai Composite Index is down 0.2% and Australia’s S&P ASX 200 is 0.4% higher. Nikkei rose 1% today to a more than one month high of 16385.89 helped by weaker yen which slipped to three week low of 105 for a dollar.

Oil futures prices are edging higher today after slumping on Wednesday following a report US crude oil output and supplies of gasoline and distillates increased last week. While crude output rose inventories declined less than expected. September Brent crude tumbled 4.6% to $46.26 a barrel on London’s ICE Futures exchange on Wednesday.

Gold is pulling back today after spot gold gained 0.8% on Wednesday. It is down 0.9% at 1330.12 as dollar strengthens against the yen.

Equities rally on investor optimism

US stocks closed at fresh record highs on Tuesday as investor confidence was boosted by rising oil prices and better than expected earnings from Alcoa. The dollar weakened as the euro and British Pound rose: the live dollar index data indicate the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, slipped 0.04% to 96.473. The Dow Jones industrial average rose 0.7% to 18347.67, a record high, led by Goldman Sachs and DuPont. The blue chip index joined the S&P 500 at an all-time closing high a day after the broad market index set an all-time closing high. The S&P 500 added 0.7% closing at 2152.14, a fresh record high, led by 2.3% gain in energy stocks. The Nasdaq index closed 0.7% higher at 5022.82, the first close in positive territory in 2016 with a 0.3% gain. The benchmark 10-year Treasury yield rose 7.8 basis points to 1.512%. Market sentiment was buoyed as better than expected quarterly report from Alcoa underpinned expectations corporate earnings may not be as disappointing as anticipated. Risk appetite was bolstered also by optimism the US economic recovery continues after stronger than expected jobs report on Friday. Analysts also note that stocks look attractive given global low interest rate environment but stock valuations are high and a recovery in corporate revenue and earnings growth is needed for a sustainable rally. In economic data a June reading of small business optimism rose for a third straight month but was below its long-term average. And US wholesale inventories edged higher in May. Today at 13:00 CET Mortgage Applications will be released in US. At 14:30 CET June Import Price Index will be published. The tentative outlook is negative for the dollar. At 16:30 CET US Crude Oil Inventories will be released by the Energy Information Agency. And at 20:00 CET June Budget Statement and Federal Reserve Beige Book will be released.

European stocks rose for the fourth straight session on Tuesday led by automaker and bank stocks. The euro and British Pound strengthened against the dollar helped by news that Britain’s interior minister Theresa May will succeed David Cameron as prime minister of the UK. The Stoxx Europe 600 index rose 1.1%. Germany’s DAX 30 gained 1.3% settling at 9964.07 helped also by 4.4% jump in carmaker Daimler shares after second quarter results beat expectations. France’s CAC 40 ended 1.57% higher. UK’s FTSE 100 slipped 0.03% to 6,680.69. Italian bank stocks rose sharply on expectations that Italy would secure a deal at Eurogroup meetings to provide financial aid to its banks which are struggling with bad debts. Today at 11:00 CET May Industrial Production will be released in euro-zone. The tentative outlook is negative.

Asian stocks are advancing today with Hong Kong’s Hang Seng Index up 0.5% with Shanghai Composite Index 0.3% higher, and Australia’s S&P ASX 200 up 0.7% . Nikkei ended 0.8% higher today as yen slipped to a three-week low of almost 105 to the dollar on expectations of more Bank of Japan easing after Prime Minister Shinzo Abe ordered a new round of fiscal stimulus spending following an election victory on Sunday. However Japan's top government spokesman said today the government was not planning central bank direct purchases of government bonds to finance government spending or tax cuts.

Today at 16:00 CET the Bank of Canada will announce the interest rate decision and the monthly policy report will be published. The central bank is expected to leave the interest rate unchanged.

Oil futures prices are edging lower today as investors took profits following previous day’s jump in prices and the American Petroleum Institute report late Tuesday indicated a surprise 2.2 million barrels rise in US crude inventories last week to 523.1 million barrels instead of an expected fall. September Brent crude gained 4.8% to $48.47 a barrel on the ICE Futures exchange in London on Tuesday on Organization of the Petroleum Exporting Countries estimate the demand for OPEC-pumped crude will rise to 33 million barrels a day in 2017, above the average 31.9 million barrels a day demand for OPEC oil in 2016.

Record sugar crops expected in US

USDA released its monthly World agricultural supply and demand estimates report (WASDE) where it forecasts production of sugar in US will be 3% higher than in 2014/15 season and 3.5% higher than in 2016/17 season. At the same time sugar imports to US are expected to fall by around 10%. Will it drive sugar prices lower?

Current sugar crop in US may surpass the record high of 1959/60 agricultural season. For this reason, its purchases in Mexico are to rise by 20% or by around 200 thousand tonnes. This volume may reach the global market and cause price correction. Now sugar prices are around one third above the level of early 2016. The additional negative for its prices is forecast of Brazilian agency CEPEA that volume of sugar cane processing in San Paulo state may rise on favourable weather conditions.

Sugar

On the daily chart Sugar: D1 hit a fresh high since October 2012 two weeks ago and slightly corrected down. Now it has approached the support of the uptrend. The Parabolic indicator continue giving signal to buy which may serve as additional level of support. The MACD has formed signal to sell. RSI is below 50 and has formed negative divergence. The Bollinger bands have narrowed which means lower volatility. The bearish momentum may develop in case the sugar falls below the last fractal low, the Parabolic signal and support of the rising trend at 19.4. This level may serve the point of entry. The initial stop-loss may be placed above the last fractal high and high since 2012 at 21.2. Having opened the pending order we shall move the stop to the next fractal high following the Parabolic and Bollinger signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level at 21.2 without reaching the order at 19.4, we recommend cancelling the position: the market sustains internal changes which were not taken into account.

Position Sell
Sell stop below 19.4
Stop loss above 21.2

US stocks close at new highs

US stocks closed at record high on Monday as market sentiment was boosted by Friday’s strong jobs report. The dollar strengthened, helped by significantly weaker yen after Prime Minister Shinzo Abe announced new stimulus measures to support Japanese economy. According to the live dollar index data the ICE US Dollar Index, a measure of the dollar’s value against a basket of six major currencies, rose 0.2% to 96.516. The Dow Jones industrial average rose 0.4% settling at 18226.93 led by a 1.5% in Boeing. The S&P 500 gained 0.3% ending at 2137.16 led by technology and industrial stocks. Utilities and telecom stocks underperformed. The Nasdaq Composite Index added 0.6% closing at 4988.64 after trading above the 5000 level during the day for the first time this year. The strong nonfarm payroll report which showed 287000 jobs were created in June instead of expected 170000 assured market participants US economy isn’t slowing down as feared after weak May report. Second earning season is starting and it is widely expected corporate earnings will continue declining. Today at 12:00 CET June Small Business Optimism Index by National Federation of Independent Business will be published. The tentative outlook is positive. At 16:00 CET May Wholesale Inventories, Wholesale Trade Sales, and Job Openings and Labor Turnover Survey Results will be published. The tentative outlook is positive. At 23:30 CET Minneapolis Fed President Neel Kashkari speaks on economy in Marquette, Michigan.

European stocks recorded third session of gains on Monday on expectations of more monetary stimulus by global central banks to prop economies after added uncertainties caused by Brexit vote. The euro weakened against the dollar while Pound edged higher even as the Bank of England is expected to cut interest rates at its Thursday meeting. The Stoxx Europe 600 gained 1.6% led by mining and industrial stocks. Germany’s DAX 30 index rallied 2.1% to 9833.41 helped by 6.4% jump in Thyssenkrupp shares on news the German industrial conglomerate was in talks with India's Tata Steel about a consolidation of European steel mills suffering from overcapacity, weak demand and cheap imports. France’s CAC 40 index rose 1.8% and the UK’s FTSE 100 index closed 1.4% higher. At Eurogroup meeting of euro-zone finance ministers France’s finance minister on Monday expressed his support for the Italian government’s efforts to aid its banking sector. Today finance chiefs will be discussing possible penalties to be imposed on Portugal and Spain for failure of the countries to lower their budget deficits. No important economic data are expected today in euro-zone.

Asian stocks are rising today to two and half month highs: Hong Kong’s Hang Seng Index is up 1% with Shanghai Composite Index 1.6% higher. Australia’s All Ordinaries Index is up 0.3%. Nikkei rallied 2.46% today as yen slid against the dollar and investors anticipated Shinzo Abe’s government may propose $100 billion in fiscal spending to boost the economy. Exporters overperformed, Toyota gained 2.7% and Honda added 2.6%.

Oil futures prices are edging higher today as Iraq briefly suspended tanker loading at two export terminals after a pipeline leak and Nigerian rebels claimed they had attacked oil facilities. Prices fell yesterday to two month lows on reports OPEC’s June crude production rose 300000 barrels a day from a month earlier to 32.73 million barrels a day, the highest level since August 2008. September Brent crude lost 1.1% settling at $46.25 a barrel on London’s ICE Futures exchange on Monday.

Gold is steady today after spot gold fell 0.8% on Monday.

US demand for gas may slump as production hits high

Natural gas price fell 6% last week in US. Its production volumes total 73.1bn cubic feet which is close to historical high hit last year. The gas stocks in US are expected to hit a fresh historical low on Thursday when the weekly EIA data will come out. The stocks are expected to rise 39bn cubic feet to 3179bn cubic feet. Will Natgas continue declining?

Several US weather bureaus forecast a drop in temperature which may reduce demand for gas used to generate power for air conditioning. At the same time their long-term forecasts point at warmer winter in US than usually. Currently the daily average of gas consumption for two weeks is around 10% above the normal daily average in 30 years. Theoretically this may point at potentially lower demand. We do not yet expect the trend reversal in gas prices but also do not rule out the downward correction.

Natgas

On the daily chart Natgas: D1 continues advancing. Now it is correcting down from its 13-month high and has already broken down through support of the short-term rising trend. The MACD and Parabolic indicators have formed signals to sell. The Bollinger bands have widened which means higher volatility. The RSI is below 50 having formed negative divergence. The bearish momentum may develop in case the natural gas prices fall below the last fractal low and the first Fibonacci level at 2.66. This level may serve the point of entry. The initial stop-loss may be placed above the Parabolic signal, the last fractal high and 13-month high at 2.99. Having opened the pending order we shall move the stop to the next fractal high following the Parabolic and Bollinger signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level at 2.99 without reaching the order at 2.66, we recommend cancelling the position: the market sustains internal changes which were not taken into account.

Position Sell
Sell stop below 2.66
Stop loss above 2.99

US dollar bullish bets rebound after Brexit

Investors increased US dollar net longs to $4.2 billion from $3.0 billion against the major currencies during the previous week, according to the report of the Commodity Futures Trading Commission (CFTC) covering data up to July 5. The economic data in the second week after UK’s decision to leave the European Union were mixed. The most significant positive development was a solid rise in June ISM Manufacturing PMI which recorded an almost 3 point gain to 53.2 from 51.3 in previous month. The increase reflects building strength in manufacturing sector before the Brexit vote and renewed strength of US dollar in subsequent flight to safety. On the other hand slowing growth of personal income and spending in May were not a good news together with slowing factory orders which point to lower capital investment down the road. Nevertheless dollar long bets rose as investors grew more risk averse and prospects of other economies looked even less promising. As is evident from the Sentiment table, sentiment deteriorated for euro, British Pound and Swiss franc. And Australian dollar joined the Japanese yen, Swiss franc and Canadian dollar as the fourth major currency held net long against the US dollar.

The bearish euro sentiment intensified: the net short position in euro widened at more than twice the previous week’s pace rising by $1.8bn to $10.4bn. The euro holds the bulk of net short position against the dollar. The net short position in euro increased as investors increased gross longs by 2431 contracts and built the shorts by 15824 contracts respectively. The British Pound sentiment also deteriorated after surprise improvement following the referendum of June 23 with the net short bets in British Pound rising by $0.4bn to $3.9 billion. The net short position in British Pound widened as the gross longs were increased by 2472 and the shorts were increased by 8792 contracts. The bullish Japanese yen sentiment strengthened with the net long position in Japanese yen rising by $0.5bn to $7.8bn. Investors increased the gross long positions by 1544 contracts and cut shorts by 2274.

The sentiment improved for the Canadian dollar with the net longs rising by $0.2bn to just $0.8 billion. Investors built the gross longs and cut the gross shorts. The sentiment turned bullish toward the Australian dollar after the central bank left the interest rate unchanged at 1.75% with net short bets turning into $366 million net longs. Investors cut the shorts and built the gross longs. The sentiment deteriorated slightly for the Swiss franc with the net long position narrowing by $275 million to $1.1 billion. Investors reduced the gross longs and increased the gross shorts.

US stocks close at new highs

US stocks closed at record high on Monday as market sentiment was boosted by Friday’s strong jobs report. The dollar strengthened, helped by significantly weaker yen after Prime Minister Shinzo Abe announced new stimulus measures to support Japanese economy. According to the live dollar index data the ICE US Dollar Index, a measure of the dollar’s value against a basket of six major currencies, rose 0.2% to 96.516. The Dow Jones industrial average rose 0.4% settling at 18226.93 led by a 1.5% in Boeing. The S&P 500 gained 0.3% ending at 2137.16 led by technology and industrial stocks. Utilities and telecom stocks underperformed. The Nasdaq Composite Index added 0.6% closing at 4988.64 after trading above the 5000 level during the day for the first time this year. The strong nonfarm payroll report which showed 287000 jobs were created in June instead of expected 170000 assured market participants US economy isn’t slowing down as feared after weak May report. Second earning season is starting and it is widely expected corporate earnings will continue declining. Today at 12:00 CET June Small Business Optimism Index by National Federation of Independent Business will be published. The tentative outlook is positive. At 16:00 CET May Wholesale Inventories, Wholesale Trade Sales, and Job Openings and Labor Turnover Survey Results will be published. The tentative outlook is positive. At 23:30 CET Minneapolis Fed President Neel Kashkari speaks on economy in Marquette, Michigan.

European stocks recorded third session of gains on Monday on expectations of more monetary stimulus by global central banks to prop economies after added uncertainties caused by Brexit vote. The euro weakened against the dollar while Pound edged higher even as the Bank of England is expected to cut interest rates at its Thursday meeting. The Stoxx Europe 600 gained 1.6% led by mining and industrial stocks. Germany’s DAX 30 index rallied 2.1% to 9833.41 helped by 6.4% jump in Thyssenkrupp shares on news the German industrial conglomerate was in talks with India's Tata Steel about a consolidation of European steel mills suffering from overcapacity, weak demand and cheap imports. France’s CAC 40 index rose 1.8% and the UK’s FTSE 100 index closed 1.4% higher. At Eurogroup meeting of euro-zone finance ministers France’s finance minister on Monday expressed his support for the Italian government’s efforts to aid its banking sector. Today finance chiefs will be discussing possible penalties to be imposed on Portugal and Spain for failure of the countries to lower their budget deficits. No important economic data are expected today in euro-zone.

Asian stocks are rising today to two and half month highs: Hong Kong’s Hang Seng Index is up 1% with Shanghai Composite Index 1.6% higher. Australia’s All Ordinaries Index is up 0.3%. Nikkei rallied 2.46% today as yen slid against the dollar and investors anticipated Shinzo Abe’s government may propose $100 billion in fiscal spending to boost the economy. Exporters overperformed, Toyota gained 2.7% and Honda added 2.6%.

Oil futures prices are edging higher today as Iraq briefly suspended tanker loading at two export terminals after a pipeline leak and Nigerian rebels claimed they had attacked oil facilities. Prices fell yesterday to two month lows on reports OPEC’s June crude production rose 300000 barrels a day from a month earlier to 32.73 million barrels a day, the highest level since August 2008. September Brent crude lost 1.1% settling at $46.25 a barrel on London’s ICE Futures exchange on Monday.

Gold is steady today after spot gold fell 0.8% on Monday.

Cotton stocks expected to decline

Global cotton production and stock estimates were revised downward for the end of 2016-17 by the International Cotton Advisory Committee. Production is still expected to rise year on year as global average yield is projected to improve but global cotton stocks are estimated to fall decline as cotton use exceeds production. Will cotton continue rising?
Cotton prices had been rising in recent weeks as production forecasts for India, world’s top cotton producer, were lowered due to drought because of late monsoon. The International Cotton Advisory Committee recently increased its forecast of global cotton prices in 2016-17 by 2 cents to 72 cents a pound because of lower global production. The ICAC revised downward its forecast for global cotton stocks by the end of 2016-17 by 200,000 tonnes to 20.4m tonnes as production estimate was lowered by 280,000 tonnes to 23.0m tonnes. Production is still expected to rise year on year as global average yield is projected to rise by 5%. However global cotton stocks are estimated to fall 5% year on year as cotton use exceeds production by 930,000 tonnes. US cotton production is expected to rise 14% year on year to 3.2m tones as US Department of Agriculture raised cotton sowings area, and India’s output is expected to rise 8% to 6.3m tonnes as monsoon weather improved. Pakistan cotton production is expected to not fall despite a drop in sowings area but Chinese output is forecast to fall 10% due to a drop in planted area.

On the daily timeframe the Cotton: D1 has been rising since the end of February. The price is consolidating in a triangle chart pattern which formed in mid-June. It is above the 200-day moving average MA(200) and the support line of the uptrend. The Parabolic indicator gives a buy signal. The Donchian channel is tilted upward indicating uptrend. The RSI oscillator is neutral as it is flat and hasn’t reached the overbought zone. The MACD indicator is above the signal line, the gap with the signal line is narrowing and the signal line leveling off. This is a bearish signal. We believe the bullish momentum will resume after the price closes above the last fractal high and upper Donchian boundary at 66.41. A pending order to buy can be placed above that level. The stop loss can be placed below the last fractal low at 64.02. After placing the order, the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop loss level (64.02) without reaching the order(66.41) , we recommend cancelling the position: the market sustains internal changes which were not taken into account.
Position Buy
Buy stop above 66.41
Stop loss below 64.02

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Markets slide as Brexit concerns resurface

US stocks retreated on Tuesday as concerns about negative impact for the global economy of UK’s decision to leave the European Union weighed on market sentiment. Lower oil prices also added to concerns about global economic slowdown. The dollar strengthened as euro and British Pound slipped: the live dollar index data indicating the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, rose 0.7% to 96.197. The Dow Jones industrial average slid 0.6% settling at 17840.62 led by a 2.8% drop in JP Morgan shares. The S&P 500 lost 0.7% closing at 2088.55 led by financial and energy stocks. The Nasdaq index closed 0.8% lower. Trading was thin after the Independence Day holiday as 6.8 billion shares were sold on exchanges on Tuesday compared with the daily average of 7.7 billion so far this year. Benchmark 10-year Treasury yield closed at record low of 1.367% as investors fled to safety of government bonds bidding their prices up and yields lower. Economic news was also negative: the 1% decline in factory orders in May was bigger than expected, following two straight monthly gains. Today at 13:00 CET Mortgage Applications will be released in US. At 14:30 CET May Trade balance will be published. The tentative outlook is negative for the dollar. At 15:45 CET final June Services PMI will be released. The tentative outlook is positive. At 16:00 CET June Non-Manufacturing PMI will be published, the tentative outlook is positive for the dollar. And at 20:00 CET June FOMC Meeting Minutes will be released.

European stocks fell on Tuesday as investor confidence was undermined by concerns about consequences of UK’s Brexit vote and suspension of trading by three UK property funds. The euro weakened against the dollar while British Pound fell to intraday low of $1.3051, a new 31-year record low. The Stoxx Europe 600 fell 1.7%. Financial stocks led the decliners as investors sold them off after three UK property funds halted trading because of a sharp increase in withdrawals following the UK referendum of June 23. Germany’s DAX 30 lost 1.8% settling at 9532.61, France’s CAC 40 ended 1.7% lower. UK’s FTSE 100 closed 0.4% higher after the Bank of England said it is lowering capital requirements for UK banks, cutting the so-called countercyclical capital buffer for banks to zero from 0.5%. This should allow banks to lend an extra £150 billion to British businesses and households. UK exporters were also helped by weaker Pound, which makes British products cheaper and more competitive in overseas markets. In economic news German factory orders in May were unchanged due to weaker domestic demand while foreign orders rose. Today at 10:10 CET June Retail Sales will be released in France, Germany and euro-zone.

Asian stocks are falling today on heightened worries over negative impact of Brexit vote as investors sell off the risky stocks to buy safer government bonds, driving bond yields lower. Hong Kong’s Hang Seng Index is down 1.0% while Shanghai Composite Index is 0.3% higher, and Australia’s S&P ASX 200 is 0.5% lower. Nikkei fell 1.9% today as yen strengthened on Brexit uncertainty and the yield on Japan’s 20-year government bond fell below zero for the first time ever. Banks and exporters were hit hard, Toyota lost 1.8% and Panasonic dropped 3.2%.

Oil futures prices are slightly higher today after slumping on Tuesday as investors weighted the news OPEC output rose by 240000 barrels a day in June to 32.88 million barrels a day while the pace of US crude oil production declines slowed in June. August Brent crude lost 4.3% to $47.96 a barrel on London’s ICE Futures exchange on Tuesday.

Natural gas is advancing today after posting the largest decline among the energy futures as August natural gas dropped 7.5% to $2.764 per million British thermal units on Tuesday, following a nearly 11% gain last week.

US stocks rebound

US stock market rebounded on Wednesday as risk appetite improved and oil rose. The dollar weakened after minutes from the Federal Reserve’s June meeting suggested the central bank will likely not raise rates soon: the live dollar index data indicate the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, edged 0.12% lower to 96.074. The Dow Jones Industrial Average gained 0.4% settling at 17918.62. The S&P 500 closed 0.5% higher at 2099.73 led by healthcare and consumer discretionary stocks. The Nasdaq Composite Index rose 0.8% to 4859.16. Federal Reserve’s June 14-15 policy meeting minutes showed policy makers will likely not raise rates in July after the report only 38000 jobs were created in May. Tomorrow June payroll report will be published and a number close to 200000 will provide support to advocates of tighter monetary policy showing the labor market is still strong and the low May jobs number was not an indication of a weakening trend. Economic data were mostly positive on Wednesday: the Institute for Supply Management’s Service PMI reading of 56.5 in June was much stronger than expected. At the same time the US trade deficit in May widened by 10% to a three-month high of $41.1 billion due to higher imports and oil prices. Today at 14:15 CET ADP Non-farm employment change for June will be published, the tentative outlook is negative for dollar. At 14:30 CET Initial Jobless Claims and Continuing Claims will be released in US, the outlook is neutral. At 16:30 CET Natural Gas Storage Change will be released by the Energy Information Agency.

European stock markets retreated on Wednesday as added uncertainty of UK’s decision to leave the European Union undermined investor confidence. The euro weakened against the dollar and the Pound hit a new 31-year low on expectations of a rate cut at Bank of England’s meeting next week after BOE Governor Carney’s warning last week that further monetary easing was likely this summer. The Stoxx Europe 600 dropped 1.7%. Banking stocks were the worst performers slumping on news three more UK property funds suspended trading Wednesday, bringing the total to six and adding to post-Brexit anxiety in global financial markets. Germany’s DAX 30 index closed 1.7% lower at 9373.62. France’s CAC 40 index dropped 1.9% and UK’s FTSE 100 index fell 1.3%.Today at 10:30 CET May Manufacturing Production will be published in UK, the tentative outlook is negative for the Pound.

Asian stocks are edging higher today with Hong Kong’s Hang Seng Index up 1.0% while Shanghai Composite Index is down 0.01%. Australia’s S&P ASX 200 is 0.5% higher despite a downgrade of Australia’s sovereign credit rating outlook to AAA negative from AAA stable by global ratings agency Standard & Poor’s. Nikkei slid 0.7% today as strong haven demand on persistent Brexit concerns contributed to renewed strength in the yen. The stronger yen notwithstanding, exporters paired previous session’s losses with Toyota gaining 0.18% and Panasonic closing 0.3% higher.

Oil futures prices are edging lower today after rebounding on Wednesday following the American Petroleum Institute industry group report US crude stockpiles fell by 6.7 million barrels last week, declining for a seventh week in a row. At 17:00 CET today US Crude Oil Inventories will be released by the Energy Information Agency. September Brent crude rose 1.8% to $48.80 a barrel on London’s ICE Futures exchange on Wednesday.