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Macro

JPY/Nikkei Correlation Returns, FOMC Mins Await


Morning Briefing February 21st 2018


Wednesday throws up a full calendar on both sides of the Atlantic, with the flash manufacturing and services PMI data likely to headline.

The European calendar gets underway at 0800GMT with the publication of the Spanish services survey and industrial orders data.

At 0800GMT, French flash PMI data will be released, with German data at 0830GMT and EMU amalgamated data at 0900GMT.

The main UK data is expected at 0930GMT, with the publication of the December Labour survey and the January public services.

The UK's January Public Sector Finances Data will show how government borrowing fared in the tenth month of the fiscal year. The MNI median expectation, taken from a poll of analysts, looks for a stg9.0bn borrowing surplus in January, excluding public sector banks balance, below the outcome in January 2017.

The jobs market health-check will show if there were any signs of changes to key metrics. The MNI median expectations, taken from a poll of analysts, looks for an unchanged jobless rate of 4.3% alongside a moderation in total earnings growth to 2.4% 3m y/y.

Also at 0930GMT, Buba Board member Andreas Dombret speaks at the 2nd Hessian Regional Bank Conference, in Brussels.

Across the Atlantic, the US calendar gets underway at 1200GMT, when the MBA weekly applications index is published.

At the same time, UK Prime Minister Theresa May takes questions in Parliament at the regular PMQs session.

The current week's Redbook Retail Sales Index will be published at 1255GMT.

Philadelphia Federal Reserve Bank President Patrick Harker speaks at 1400GMT, with an audience Q&A.

Bank of England Governor Mark Carney, along with Dep Gov Broadbent, Chief Economist Andy Haldane and MPC member Silvana Tenreyro all appear before the Commons Treasury Select Committee, starting at 1415GMT.

At 1445GMT, the US Manufacturing and Services flash PMIs will be released, followed by the NAR existing home sales data at 1500GMT.

The minutes of the Federal Reserve January 30-31 FOMC meeting will be published at 1900GMT.

Global Economic Trading Calendar


Markets


SNAPSHOT: Below gives key levels of markets in the second half of the Asia-Pac session: - Nikkei 225 down 41.07 points at 22027.44 - ASX 200 down 2.354 points at 5942.1 - Chinese markets remain closed for the LNY holiday. - JGB 10-Yr future up 3 ticks at 150.74, JGB 10-Yr yield down 0.4bp at 0.064%  - Aussie 3-Yr future up 2.5 ticks at 97.815, yield down 2.1bp at 2.144% - Aussie 10-Yr future up 3 ticks at 97.105, yield down 2.9bp at 2.902% - US 10-Yr future up 1 tick at 120.16+, yield down 0.19bp at 2.8932%

US TSY/RECAP: It was a relativly quiet start to the week in the US, rates trading lower all session, off lows late after absorbing a lot of Tsy supply: - Decent two-way flow was noted in Tsys, with a large duration weighted flattener seen. - Heavy Eurodollar option trade, continued better buying low delta puts to hedge for underlying pricing in increased chances of quarterly rate hikes.

AUSSIE BONDS: The Australian Office of Financial Management (AOFM) sells A$600 of 2.75% 21 November 2028 bonds, issue #TB152. - Average Yield: 2.9052% (prev. 2.8862%) - High Yield: 2.9175% (prev. 2.8875%) - Bid/Cover: 4.5033 (prev. 5.4267) - Allotted at high yield: 12.2% (prev. 75.6%) - bidders 43 (prev. 48), successful 20 (prev. 15), allocated in full 9 (prev. 6)

AUSSIE BONDS: Aussie bonds moved to session lows following the wage data, with the 10-Year futures printing at 97.080, before moving back to 97.100. 3-Year futures also moved to session lows of 97.795, and last trade at 97.815. The auction of a 10-Year Future basket constituent was well digested, despite softer cover and a longer tail, as a much lower % of the take-up was received at the high yield this time out.

US TSY FLOWS: TYH8 around 3.3K given over 4 clips at 120.14+ takes us to session lows, US 10-Year yield last 2.897% (+0.7bp)

YEN: JPY has underperformed on the session thus far after Asakawa, Japan's vice minister of finance for international affairs noted that he "cannot help but assess the yen movements as one-sided". - Elsewhere BoJ board member Funo warned against becoming overly pessimistic on the the outlook for the Japanese economy.

JGBS: JGB futures went in to the lunch break 3 ticks higher at 150.75, as the curve flattened. - The BoJ conducted Rinban operations across the 1-10 Year buckets, with the 1-3 Year cover ratio a lower this time out, while the 3-5 & 5-10 Year buckets' cover ratios ticked higher alongside a narrowing in the 5-10 Year bucket's yield spread. These factors alongside a slightly flatter US curve probably led to the modest flattening that we have seen in the cash space.

STOCKS: Regional stock indices traded higher, shaking off the losses seen on Wall St - US futures also managed to post modest gains, with the mini S&P up 2 and the mini Dow 12 points higher.

OIL: Crude took a hit on the back of the continued uptick in the USD, with WTI last trading $0.60 lower at $61.20 & Brent $0.50 lower at $64.75. - Markets await the release of the latest API crude inventory estimate due on Wednesday.

GOLD: The yellow metal has fallen afoul of the stronger USD & 10-Year US yields consolidating around 2.9% in recent sessions.

FOREX: The USD ground higher overnight. The key risk event over the next 24hrs will be the release of the minutes from the latest FOMC decision. - USDJPY continued its move away from the recent lows at circa 105.50 as Asian equities rebounded - GBP was range bound ahead of today's labour market report. - The EUR was also contained as we await the latest batch of flash PMIs on Wednesday. - The AUD initially bounced following a modest beat in the latest wage data, before retracing as the print isn't expected to impact the RBA's mon pol. - NZD traded in a relatively contained manner as it awaited local data releases due later in the week.

US TSYS: A soft afternoon for the Nikkei 225 (now down on the day after posting decent gains in the morning session) has spilled over into US Tsys with heavy enough buyside activity pushing TYH8 to session highs of 120.17+ as the USDJPY has pared its gains to last trade at 107.70.

Technical Analysis


BUND: (H18) Above 159.66 To Target 160.76-161.23

*RES 4: 159.66 High Jan 29
*RES 3: 159.33 High Jan 31
*RES 2: 158.89 Daily Bear channel top
*RES 1: 158.69 21-DMA

*PREVIOUS CLOSE: 158.38

*SUP 1: 157.90 Low Feb 21
*SUP 2: 157.65 Low Feb 16
*SUP 3: 157.42 Low Feb 15
*SUP 4: 157.26 2018 Low Feb 8    

*COMMENTARY: Hesitation ahead of 158.69-159.66 continues with bulls continuing to look for a close above 159.66 to confirm breaks of the 21-DMA and the daily bear channel top, shifting focus to 160.76-161.23 where 55 & 100-DMAs are noted. Bears now look for a close below 157.90 to gain breathing room. A close below 157.26 remains needed to add weight to the case for a test of the bear channel base (156.32). Daily studies have corrected to more neutral levels.

EUROSTOXX50: 3368.1 Support Remains Key

*RES 4: 3491.6 21-DMA
*RES 3: 3474.9 Low Feb 5 now resistance
*RES 2: 3469.2 Low Jan 2 now resistance
*RES 1: 3436.7 High Feb 19

*PREVIOUS CLOSE: 3435.1

*SUP 1: 3398.6 Low Feb 16
*SUP 2: 3368.1 Hourly resistance Feb 14 now support
*SUP 3: 3306.6 2018 Low Feb 9
*SUP 4: 3304.0 100-WMA

*COMMENTARY: Daily studies correcting from O/S remain the key concern for bears and support a correction back to 3469.23-3474.86. Above 3474.86 initially targets DMAs clustered 3523.2-3600.3. Key support remains at 3368.10 with bears needing a close below to end correction talk and retain focus on the 200-WMA (3296.5). Bears need a close below the 200-WMA to target 2017 lows (3214.3).

Eurex Futures Market Close


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This article is from Eurex Exchange and is being posted with Eurex Exchange’s permission. The views expressed in this article are solely those of the author and/or Eurex Exchange 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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Technical Analysis

VIX (VX) Rising for 4th Straight Day


The VIX (VX) is edging up for the 4th straight day today as it reclaims the 61.8% Fib retrace of the early February fall.  Significantly, the two weeks or so of profittaking appears to be nearing completion as the VX tries forming a higher base relative to the early January range.  Although the weekly chart included does not provide enough price history to offer meaningful weekly RSI, Stochastics and MACD interpretation, the still upsloping weekly MACD on its own is bullish.  Complementing the bullish weekly MACD is the bottomish or rallying daily and 4hr RSI, Stochastics and MACD.  The daily MACD still slopes down but could quickly flatten and perk up on one strong up day for the VX.  I am looking to go long in the green zone (of the daily chart) and am targeting the red zone for Friday.  The amber/yellow zone is where I might place a stop if I was a swing trader (although in my personal account with which I seldom hold overnight I set my stops tighter).

VIX (CBOE VX Mar18) Weekly/Daily/4hr



Click here for today's technical analysis on S&P500, Natural Gas

 

Tradable Patterns was launched to demonstrate that the patterns recurring in liquid futures and spot FX markets can be analyzed to enhance trading performance. Tradable Patterns’ daily newsletter provides technical analysis on a subset of three CME/ICE/Eurex futures (commodities, equity indices, and interest rates), spot FX and cryptocurrency markets, which it considers worth monitoring for the day/week for trend reversal or continuation. For less experienced traders, tutorials and workshops are offered online and throughout Southeast Asia.

 

This article is from Tradable Patterns and is being posted with Tradable Patterns’ permission. The views expressed in this article are solely those of the author and/or Tradable Patterns 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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Futures

FX Rundown


Euro (March)

Session close: Settled at 1.23565, down 83 ticks

Fundamentals: The Euro has had a tough two-session run since edging a new swing high early Friday at 1.25795. The price has reversed about 1.7% ahead of tomorrow’s FOMC Minutes and Thursday’s ECB Minutes, both from their late January meetings. The catalyst, mostly technical does boil down to some fundamentals. After a slightly better read on U.S CPI last week, U.S housing and consumer confidence data was much better than expected Friday. It is also important to note that the Yen was the leader on this most recent leg higher into Thursday night and was the first to begin fading (details below). Now, you will begin hearing all the Dollar bulls who were essentially wrong three times in January and many times in the months before screaming for vindication on this small pull back. But lets please remember that they have been wrong, at the bare minimum, for the last 5% and some even 10%. In Sunday’s Tradable Events this Week, we discussed how both the FOMC and ECB Minutes are expected to move markets. Much of this recent pull back is due to positioning and traders paring positions ahead of not only these releases but key Fed speakers throughout the week. Gaining new traction is the potential of German Bundesbank President Weidmann becoming the next ECB President. We believe that this old card that was always in play, but newer hawkish development has not even begun to be priced in and could be a key catalyst in sending the Euro above 1.30 later this year. Tomorrow, we look to German Manufacturing data at 2:30 am CT and the Eurozone read at 3:00. Philadelphia Fed President Harker speaks at 8:00 am CT, Manufacturing, Markit Composite and Services PMIs are all due at 8:45 and Existing Home Sales is at 9:00. The FOMC Minutes will be released at 1:00 pm CT and we look forward to what hike dissenter, Minneapolis Fed President Kashkari says at 7:15 pm.

Technicals: On Thursday evening, we said the longer price action stays above 1.24805-1.2514, the more bullish it becomes; after edging a new high and testing major three-star resistance, it was trading back below this level by 6:00 am CT Friday morning. What does that mean? Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels. 

 

Yen (March)

Session close: Settled at .93365, down 85 ticks

Fundamentals: The Yen has led the way lower on this two-session U.S Dollar resurgence ahead of tomorrow’s FOMC Minutes. Price action ran into our rare major four-star resistance late Thursday night and this move is a combination of technicals and the underestimated power of officially reappointing BoJ chief Kuroda, which also came that evening. It was essentially a foregone conclusion that Prime Minister Abe was going to reappoint Kuroda, the architect of Japan’s ultra-loose monetary policy, but it was unnerving to those who position massively in the space that the official reappointment was delayed; was it a signal that policy tweaking or tightening was coming later this year? Japanese Trade Balance data Sunday night showed the first trade deficit since May though it was not as high as expected. Many are praising this as a sign of economic good times with rising imports, however, this read is more seasonal. Furthermore, imports missed expectations. Tonight, we look to Manufacturing PMI at 6:30 pm CT and Industries Activity data at 10:30. Also, Board Member Funo is due to speak at 7:10.

Technicals: We use major four-star levels only rarely to emphasize their importance and furthermore, we had no other resistance above here. We said Thursday evening that traders should capitalize against this level. Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels. 

 

Aussie (March)

Session close: Settled at .7878, down 28 ticks

Fundamentals: The Aussie Dollar retreated on the session but held well when compared to its peers versus the U.S Dollar. RBA Minutes last night were upbeat at best mentioning reduced unemployment and a pickup in global growth and inflation. However, they believe that further progress in inflation will only be gradual. Ultimately, we are seeing a bounce in the U.S Dollar with the failure in the Yen leading the way. This is a consolidation ahead of tomorrow’s FOMC Minutes. Out of Australia tonight is MI Leading Index at 5:30 pm CT and Wage and Construction data at 6:30 pm CT. The rest of the week is quiet on the Aussie data front.

Technicals: Friday’s session clung to our pivot level but today’s close was clearly below and though this opens the door for the sellers, first key support comes in at...  Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels. 

 

Canadian (March)

Session close: Settled at .7913, down 57 ticks

Fundamentals: Volatility in equity markets continue and this does not bode well for the Canadian Dollar. This was a poor session that saw Crude Oil hold ground well. The U.S Dollar is strengthening as shorts take profits ahead of tomorrow’s FOMC Minutes. There is no major data out of Canada until a key Retail Sales read on Wednesday. Tomorrow morning’s U.S data as well as the action in Crude now that the March contract has fallen off the board will be critical for the trade.

Technicals: Price action settled below major three-star support, a level that we have been eyeing as a line in the sand for quite some time. This level was rejected just about a week ago. 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.


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Securities Lending

SLB Update: Largest Short Value


These were the 15 securities with largest short value on 02/16/18.


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Securities Lending

SLB Update: Highest Borrow Fees


These were the 15 securities with highest borrow fees on 02/16/18.

 

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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