Gold is getting pressured early this morning on euro weakness, writes President Bill Baruch of Blue Line Futures.
E-mini S&P (ESH)
Yesterday’s close: Settled at 2771.50, down 20.00
Fundamentals: U.S benchmarks slipped again yesterday before quietly trading lower overnight. Still, our major three-star support level has held this extremely healthy pullback in check. The tape has shifted into the green after the European Central Bank (ECB) turned fully dovish by reintroducing the long-term financing targeted longer-term refinancing operations (TLTROs). With hints of such in the weeks leading up to this meeting, it is still a surprise that they caved so quickly with some of the economic indicators showing signs of turning a corner. Heading into Q4 2018, it was projected that the ECB will hike rates for the first time in the autumn of 2019; instead fresh stimulus measures will now be introduced in September. ECB President Mario Draghi will hold a press conference at 7:30 am CT.
Technicals: We continue to hold a minor bearish bias; while we believe the market is over-extended, with potentially a fourth failure above 2800 budding, shorts must capitalize on these downswings.
Crude Oil (CLJ)
Yesterday’s close: Settled at $56.22, down 34¢
Fundamentals: Crude oil is playing out exactly as we have been expecting, more technical than ever. Price action is contained within major three-star support and resistance; detailed in the ‘Technical’ section from Monday. Yesterday’s EIA inventory report was certainly headline bearish, but when you diver deeper into the data, not so much. Yes, crude oil inventories grew by 7.069 million barrels and those at Cushing, Oklahoma by 873,000. However, much of this was offset by a draw in the products combined for 6.62 million barrels. Furthermore, we did see imports bounce back firmly by over 1 million-per-day, which contributed to the bloating in crude, and there was no increase in production from the lower 48 states. Overall, Crude is bouncing back this morning as it remains range bound. What traders must understand is that we are now in a seasonally bullish time of year through May.
Gold (GCJ)
Yesterday’s close: Settled at $1,287.6, up $2.90
Fundamentals: Gold is getting pressured early this morning on euro weakness. The ECB made a decisively dovish move by reintroducing the TLTRO at their policy meeting this morning. Treasuries are moving higher, however, the dollar strength has offset this effect on gold. Traders must monitor the currency situation close as we head into the jobs report tomorrow morning. On the U.S data front weekly Initial Jobless Claims, Unit Labor Costs and Nonfarm Productivity all beat expectations. Fed Governor Brainard speaks at 11:15 am CT.
Technicals: Price action made a quick dip to a new low of $1,280.8 at 2:00 am CT. This was met with quick buying that brought gold back into the middle part of its range this week.
For a full view of our technical outlook on these market and more, including specific support/resistance levels throughout the week go to Blue Line Futures.
