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Session close: Unchanged
Fundamentals: All things considered, the Euro reacted in a very quiet manner to today’s news. A strong read on private ADP Payrolls along with better than expected Nonfarm Productivity and Unit Labor Costs supported the Dollar this morning. However, as we discussed, last night’s Fed speak was drowned out by the resignation of Gary Cohn. While the Dollar initially weakened on the Cohn news, comments from Fed Governor Brainard stabilized the trade; “headwinds are shifting to tailwinds” and this could speed up the path of rate hikes. Atlanta Fed’s Bostic said today that he is in more of a wait and see position when it comes to trade policy developments. He is known as a dove but eluded to the economy warranting two to four hikes this year. The Fed released their Beige Book this afternoon and signaled a broad but moderate rise in wages and inflation. The quieter session comes ahead of tomorrow morning’s ECB policy decision at 6:45 am CT. Mario Draghi will follow with a press conference at 7:30 am CT. The ECB is likely to be upbeat about economic conditions but uncertainty surrounding U.S trade policy might hold them back from a more hawkish tone otherwise.
Technicals: The Euro spiked to a session high early this morning of 1.24615 but spent literally no time above 1.2440 as price action was met with strong key resistance at 1.2433-1.2457. Yesterday, we said this level is about as close to a major three-star level as it comes. We also discussed that traders must manage risk and prepare for tomorrow’s ECB meeting, eluding to a failure to get above here is the time to do so. Today’s pullback to a low of 1.2393 did not even get as low as first key support which means the tape remains extremely constructive.
Resistance: 1.2433-1.2457**, 1.2496*, 1.25795-1.2608***
Support: 1.23715-1.2382**, 1.2331-1.2337**, 1.2290*, 1.2209-1.2230***, 1.2114-1.21405**, 1.2004***
Session close: Settled about .94345, up 13.5 ticks
Fundamentals: An exuberant open last night in the Yen unfolded much different. Equity markets stabilized early in the evening and the S&P covered its gap within an hour of the cash open. The Yen traded lower as equities strengthened into the close on the announcement that the tariffs will be signed by the White House this week but there will be carve outs for Mexico and Canada as well as countries on a case by case basis. While a strong equity market can combat strength in the Yen, we have remained bullish both, so this news does not concern us much. The next 24 hours will be crucial, and traders must manage risk. It is also important to remember that price action has stayed contained below major four-star resistance. GDP data is due out of Japan tonight at 5:50 pm CT while the Bank of Japan meets tomorrow.
Technicals: While long-term technicals remain extremely positive, the short-term trade is seeming to run out of steam against major four-star resistance. Considering this along with data and central banks through Friday, we Neutralized our Bias slightly. Today’s trade retreated from a high of .94895 to settle in at the pivot level. First key support at .9399-.9404 will be crucial to keeping the immediate and intermediate term positive.
Support: .9399-.9404**, .9310*, .9246-.9260***, .9170**, .9073-.9094***
Session close: Unchanged
Fundamentals: The Aussie gapped lower on the open last night due to the risk-off trade on the Cohn news. GDP data missed expectations by one tenth both YoY and QoQ, but last quarters read was revised higher; the news was somewhat neutral. As equity markets recovered, so did the Aussie and it would seem that buyers are defending the lowest level since December. The currency will be dependent on data tonight that includes Aussie Trade Balance at 6:30 pm CT and China Trade Balance due around midnight.
Technicals: Price action is trading firmly just above major three-star resistance, this is key because this should ultimately break the immediate term downtrend. The next 24 hours will trade very fundamental with news and data, but this level will remain crucial on a closing basis.
Resistance: .7805-.7815***, .7882-.7893**, .7987-.7991**, .8046-.8051***, .8135-.8151****
Support: .7733-.7757***, .7640**
Session close: Finished electronic session unchanged
Fundamentals: The Canadian traded lower on the Bank of Canada at 9:00 am CT. They were not expected to change policy due to the recent slowdown in economic data. However, they cited “trade policy developments as an important and growing source of uncertainty for the global and Canadian outlooks.” The Canadian lost 0.5% and traded to a half a tick higher than the recent low of .76925. Things did take a positive turn this afternoon though and the Canadian made it back to unchanged on news that Mexico and Canada will get exemptions under the trade tariffs which are expected to be signed as early as tomorrow. New Housing Price Index is due tomorrow at 7:30 am CT. BoC Governor Poloz speaks at 10:00 am CT and Council Member Lane at 2:35 pm CT.
Technicals: Today’s price action is the first positive development for the Canadian in quite some time. We now have first key support at the recent low but a move down below there should encourage strong selling. We have reduced the significance of the .7752-.7787 level as price action is due to fish above there for buyers from oversold territory.
Resistance: .7752-.7787**, .7881-.7913***
Cattle Commentary: Outside markets stabilized today, shrugging off yesterday’s knee jerk reaction on the resignation of the Presidents Chief Economic Adviser. Trade/tariff chatter continued to linger but there was an opening in the clouds into the stock market close when rumors circulated that there could be tariff exemptions for Canada and Mexico. Today’s Fed Cattle Exchange sold 387 out of 474 head at 126, the remaining 87 were passed on at 126. As mentioned yesterday, cash trade at 126 is enough to support but the bulls will need to see better than that to get a rally. There are still asking prices hanging at 128; the bulk of last week’s trade came in 126-127. Today marked the first day of the 5-day index roll for J (April) commodities. Boxed beef continued to inch higher again today.
PM Boxed Beef / Choice / Select
Current Cutout Values: / 223.57/ 215.20
Change from prior day: /.22 / .00
Choice/Select spread: / 8.37
Live Cattle (April)
Live cattle futures staged an inside day which is where prices trade within the previous days range. First technical support from 121.90-122.45 held through the session which is a starting point, but the bulls need to see actual momentum not just support. A break and close below support opens the door towards 120.00-120.25. This pocket represents the 200-day moving average along with the 50% retracement (middle of the range) from the August lows to the November highs. On the flip side, first technical resistance also held which we outlined as 123.40-123.80. A breakout above opens the door to a run towards 125.45-125.675. This is the bottom end of the range which offers more reward than risk, but the chart is littered with caution flags.
Resistance: 123.40-123.80**, 125.45-125.675***, 127.20-127.95**
Support: 121.90-122.45***, 120.00-120.25**, 117.90-118.05****
Feeder Cattle (March)
Yesterday’s reversal and lower high set the table for weakness in today’s session as the market failed to gain any significant ground above the 200-day moving average. First resistance tomorrow comes in from 144.65-144.95. The market has seemingly shifted over the past week which has the bulls feeling a little nervous going into the back half of the week. First support for tomorrows session comes will come in from 142.75-143.50. A break and close below will likely encourage those nervous bulls to temporarily throw in the towel which could open the door for a run at 139.85-140.30. The RSI (relative strength index) is currently at 41.26, this is towards the lower end of the range we have seen to start the year.
Resistance: 144.65-144.95**, 146.45-146.85***, 147.525-148**, 149.40 150.90****
Support: 142.75-143.50**, 139.85-140.30***, 138.30***
Lean Hog Commentary and Technicals (April)
Lean hog futures rolled over hard through the morning but rallied just as hard through the afternoon session. April lean hogs finished the session down .25 at 67.95, this after trading in a range of 1.90. Today starts the first day of the 5-day index roll for J (April) commodities, June futures will start picking up in volume and will become the month of interest for us before long. The chart resembles a technical graveyard over the past two months but today’s capitulation like trade could start to turn the tide.
Resistance: 69.50-69.80***, 71.15-71.35**, 72.60-73.15****
Support: 66.425-66.875**, 64.85-65.05***, 63.50-63.75**
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