Euro (March)
Session close: Settled at 1.2402, up 60.5 ticks.
Fundamentals: This was another constructive session for the Euro on disappointing U.S data and drama in Washington. First, Core CPI was in line with expectations at 0.2% MoM and 1.8% YoY, however, this was slower than January and December. Considering the more hawkish tone from the Fed on inflation prospects, this is considerably a disappointing read for many as it also places more emphasis on the non-existent wage growth. Now to the meat of the day, President Trump dismissed Secretary of State Rex Tillerson from his post. This added to pressures in the Dollar due to the uncertainty of his replacement Mike Pompeo. While Pompeo, a proven leader, is the moving over from the CIA Director position, it still presents tactical uncertainties where Tillerson had been the driving force on; North Korea, Russia, China, etc. For us, the combination of the two events today is a reason to believe the Dollar will trend lower into next week’s Fed rate hike meeting. Tomorrow will be a pivotal day in confirming the resumption of this trend; German CPI data is at 2:00 am CT, ECB President Draghi speaks at 3:00 am CT, Eurozone Employment and Industrial Production data are at 5:00 am CT. Out of the U.S, PPI and Retail Sales are at 7:30 am CT and Business Inventories data is at 9:00 am CT.
Technicals: Today’s session was a clear win for the bull camp and lays the ground work for follow through in the coming sessions. Still, first key resistance comes in at 1.2433-1.24615, a level that we have seen over and over again and now aligns with the previous swing high; a move out above here might encourage enough buying to drive it a penny higher. Support now comes in at 1.23505 and as long as this hold the bulls are in the driver’s seat.
Bias: Bullish
Resistance: 1.2433-1.24615**, 1.2496*, 1.25795-1.2608***
Support: 1.23505**, 1.22945-1.2304**, 1.2209-1.2230**, 1.2166-1.2170***, 1.2004***
Yen (March)
Session close: Settled at .9284, down 22 ticks.
Fundamentals: The Yen was slammed overnight, trading to the lowest level since February 28th as U.S equity markets grinded higher into the morning. There was a clear risk on environment and Gold had also taken a bit of a bath ahead of U.S CPI data. However, the tables turned quickly and the Yen which was down nearly a whole point retested unchanged before the session was finished. U.S CPI data slowed MoM which hit the Dollar pinning more of an emphasis on the bad wage growth read. Right around the same time, it was announced that Rex Tillerson was relieved of his position as Secretary of State. Equity markets shook off the news initially but got hammered as the day unfolded and the emphasis on China trade tariffs gained traction. With a weaker Dollar and uncertainty brewing once again in equities, the safe-haven trade regained its wings. The next 24 hours will be critical, but after turning more Neutral yesterday, we now have reason to believe the path of least resistance is again higher for the Yen. Core Machinery data is due at 6:50 pm CT and the BoJ Minutes from the previous policy meeting are due at the same time. We look forward to data out of China tonight that includes Fixed Asset Investment, Industrial Production and Retail Sales.
Technicals: Price action recovered sharply today but faces a strong firs key resistance as a hurdle. Getting out above here would spark further buying. This level will also be critical on a closing basis in order to neutralize whatever edge the bears were thought to have gained in recent sessions. Still, the next bull leg is only possible upon a close out above our rare major four-star resistance.
Bias: Bullish/Neutral
Resistance: .9416-.9429**, .9480-.9491****
Pivot: .9429
Support: .93225-.93455**, .9246-.9260***, .9170**, .9073-.9094***
Aussie (March)
Session close: Settled at .7867, down 1 tick
Fundamentals: The Aussie had a choppy overnight session that handled a weak read on Home Loans data fairly well. The tape moved higher as the U.S Dollar weakened on the CPI read and the Tillerson news. However, the session turned volatile as equity markets went south in a risk-off environment due to drama and Washington and the announcement of $60 billion in tariffs on Chinese goods which could hit home for the Aussie. Westpac Consumer Sentiment is due tonight at 6:30 pm CT. The major focus is Fixed Asset Investment and Industrial Production data out of China.
Technicals: The turn lower is now testing major three-star support and this, as we said yesterday, is critical to hold in order for bulls to maintain the upper hand. We will be watching this test closely, but for now, the failure against first key resistance is bringing a heavy enough tape to Neutralize our Bias in the near-term.
Bias: Neutral
Resistance: .7882-.7893**, .7987***
Support: .7842-.7848***, .7770-.7776**, .7713-.7733***, .7640**
Canadian (March)
Session close: Settled at .7728, down 66 ticks
Fundamentals: While the Canadian initially capitalized on the weaker Dollar, it turned lower in a hurry on comments from Bank of Canada Governor Poloz. The chief was dovish and focused on the trade debate. The second leg lower came later in the session as equity markets also lost significant ground. Though the Canadian is weak, the U.S Dollar is likely to weaken ahead of next week’s Fed hike and this should keep the downside limited in the near-term.
Technicals: The market is testing first key support which was the recent low. A close below this level will keep the sellers in the driver’s seat but until then the market is likely to consolidate as value buyers defend the .7700 area. Only a close back above .7752-.7787 will neutralize this weakness technically.
Bias: Neutral
Resistance: .7752-.7787**, .7823**, .7881-.7913***
Support: .76925**, .7550***
Cattle Commentary: Cattle futures started the day off on the softer side but managed to reverse and recover into the close. April fat cattle finished the session up .65 at 122.20, trading in a range of 1.825. April feeders finished the session down .20 at 142.375, trading in a range of 2.175 for the day. In yesterday’s report we mentioned looking for cash to trade steady to 1 higher, that was where the bulk came in today. We saw a lot of 126 and 127 with 128 making an appearance in NE, we were calling/texting/emailing clients as these whispers started in the early afternoon. The bulls need to see a firm cash trade develop into a rally on the board, a failure to sustain anything will encourage longs to throw in the towel. Tomorrows Fed Cattle Exchange has a whopping 113 head listed. Outside markets got hit after the cattle close, if this continues tomorrow it could be a headwind for the board. Boxed beef was lower on the day.
PM Boxed Beef / Choice / Select
Current Cutout Values: / 223.73/ 216.75
Change from prior day: / (.17)/ (.74)
Choice/Select spread: / 6.98
Cattle Technicals
Live Cattle (April)
Cattle spent majority of the day under pressure as they slow bleed brought prices down to their lowest levels in two months. We have been talking about 120.15-120.25 being very significant for a while now. A break and close below would encourage additional fund selling and potentially press prices back towards 117.90-118.05. Fortunately, the bulls found buyers just above that pocket and closed towards the higher end of the day’s range. First resistance we mentioned in yesterday’s report was tested held, that came in and continues to be at 122.55, this represents a key Fibonacci retracement from the August lows to the November highs. If bulls can chew through this we would expect to see the market run towards the top end of the recent range which is also technical resistance defined by the 50 and 100 day moving average, that comes in from 123.55-123.80.
Resistance: 122.55**, 123.55-123.80****, 125.45-125.675***
Support: 120.15-120.25**, 117.90-118.05****
Feeder Cattle (April)
April feeder cattle posted lower lows yet again today before rebounding towards the close to finish only slightly lower. Technical support for the May contract comes in from 141.025-141.75, this pocket represents previously important price points along with a key Fibonacci retracement from the June lows to the November highs. If this pocket gives way, we could see momentum selling pressure press prices down towards 137.70. On the resistance side of things, the bulls have some work to do and need to reclaim 144.75-145.00 to start shifting the tide back in their favor.
Resistance: 143.85-143.95**, 144.75-145.00**, 146.45-146.85***
Support: 141.025-141.75***, 137.70****, 131.25****
Lean Hog Commentary and Technicals (April)
Lean hog futures put the squeeze on weak shorts as they made a run towards 69, that was shortly lived as buying dried up and pressed prices back towards the unchanged level. April futures finished the day up .10 at 67.775, trading in a range of 1.425. We have been pretty clear in our bearish bias over the past two months but that is starting to shift. The juice left in the short side “grape” is likely limited at this point. We would not be surprised to see the market fish for the August lows near 65, this would be the point where we would see value to the buy side on the first test.
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**
E-mini S&P (June)
Yesterday’s close: Settled at 2772.75, down 16.25
Fundamentals: Yesterday was a tough session for market bulls, and we took our licks. CPI data was in line with expectations and this did pave the road higher for equity markets; the S&P traded to a new swing high of 2807.25 and the NQ extended to a new record. Not so fast though, the White House took another dramatic turn with the release of Secretary of State Rex Tillerson. The reaction was not immediate, it seemed as if the market was trying to turn a corner from the ‘sell first, ask questions later’ environment. But as investors digested the uncertainty this brings to foreign policy, it was not long before price action began cascading lower. The true pressures arrived on news that President Trump is targeting $60 billion in Chinese goods with a strong focus on information technology, consumer electronics and telecommunications. This news especially weighed on the more tech focused NQ as the FANG leaders lost significant ground. On to today, strong Industrial Production and Fixed Asset Investment data out of China last night helped price action form a bottom. Dovish comments from ECB President Mario Draghi lifted the tape further. We remain upbeat on this market and today could be a solid recovery session. PPI and Retail Sales data is due at 7:30 am CT. Though the PPI inflation read takes a back seat to CPI, it must be closely watched. Retail Sales will garner more attention today, especially coming off an abysmal January read. The post-holiday hangover contraction will be easily forgiven on a stronger than expected today and we believe good news here is good news for stocks. Business Inventories data is due at 9:00 am CT.
Technicals: Price action yesterday took out major three-star support on the second test and traded down to our third level of support into the close and overnight. The 2762.25-2764.25 level has held into this morning with a swing low of 2762.25. Our next major three-star support level does not come in until 2747.85, a level that aligns multiple strong technical indicators as well as the breakout on strong volume on Friday; we will remain outright Bullish until a close below here. The market has regained the 2779.50 level this morning; it must close above here in order to neutralize yesterday’s weakness. Strong resistance does come in at 2784.75. While a move out above here today is likely to garner additional buying, a close out above here brings more confidence into the back half of the week. This morning, we are looking for pullbacks to 2772.75-2775.25 as a buying opportunity on the first test.
Bias: Bullish
Resistance: 2784.75**, 2800.50***, 2817.25**, 2831.25***
Pivot: 2779.50
Support: 2772.75-2775.25**, 2762.25-2764.25**, 2747.50***
Crude Oil (April)
Yesterday’s close: Settled at 60.71, down .65
Fundamentals: Crude Oil turned south sharply yesterday after failing to regain the $62 mark. We see the main driver as Crude being a casualty to the risk-off environment along with traders paring back long bets ahead of inventory data. The Dollar was not stronger on the session. Price action stabilized above the psychological $60 barrier and less of a build than expected from API +1.156 mb Crude versus +1.5 mb invited some of the buyers back to the party. Strong Industrial Production and Fixed Asset Investment data out of China last night has also been supportive. Additionally, according to Bloomberg, China’s Oil demand rose 13.3% from January through February versus the same time last year. OPEC’s monthly report is out at 7:50 am CT today. The EIA inventory report is due at 9:30 am CT and the expectations are for +2.023 mb Crude, -1.176 mb Gasoline and -1.519 mb Distillates. Production will be critical as always.
Technicals: With a weaker U.S Dollar and Crude testing major three-star support, we are slightly Bullish on Crude but are cautious ahead of today’s EIA data. Price action hugging the pivot level this morning as traders await the OPEC Monthly Report. Strong resistance does come in at 62.25-62.58, however, just below there is a newly formed trend line from the February 26th high and comes in front of that at 61.80. A move out above here will encourage fresh buying and because of this we have reduced major three-star resistance at 63.27-63.50 to only a key level.
Bias: Neutral/Bullish
Resistance: 61.80**, 62.25-62.58**, 63.27-63.50**, 64.24-64.39**, 66.00**, 66.66-66.87***
Pivot: 61.36-61.42
Support: 59.95-60.32***, 59.05-59.29**, 57.26-57.95***
Gold (April)
Yesterday’s close: Settled at 1327.1, up 6.3
Fundamentals: Despite a quick stop-run, Gold liked the in-line CPI read yesterday. Ultimately, this pins much more of an emphasis on the non-existent wage growth as we head into next week’s Fed hike meeting. However, Gold also enjoyed a safe-haven bid on the news that Secretary of State Rex Tillerson was dismissed by the White House. Equity market came under pressure on this news as well as tariff fears; President Trump is looking to impose $60 billion in tariffs on China with a strong focus on tech and telecommunications. The Dollar did not like this news either and found itself trading lower before ECB President Mario Draghi jawboned the Euro back early this morning. Gold finds itself consolidating ahead of PPI and Retail Sales data. While PPI will garner a little more attention due to the in-line CPI, Retail Sales is a big read coming off last month’s post-holiday contraction. Both will go a long way in dictating the Gold trade today. Business Inventories are due at 9:00 am CT.
Technicals: Yesterday’s constructive price action paves the way for a higher tape, but the hurdle remains first key resistance at 1327.3-1329.8. The overnight high was 1330.5 before falling back in the meat of yesterday’s range. Today’s data will be critical, and a close out above first key resistance would signal a move to the 1341.2-1342.9 level if it has not already happened on today’s session. Gold is building a beautiful floor on a longer-term basis and it just needs one small catalyst to make its way to knock on the 1360 door once again, and this time we imagine it will break out above.
Bias: Bullish/Neutral
Resistance: 1327.3-1329.8**, 1341.2-1342.9**, 1350.2-1351.3**, 1367.8-1370***
Pivot: 1318.3-1322.8
Support: 1312-1313.2**, 1305.5-1307.1***, 1291.5-1297.6****
Natural Gas (April)
Yesterday’s close: Settled at 2.786, up .008
Fundamentals: Natural Gas is down heavily this morning on a technical failure to at our major three-star resistance. Although Nor’easter is making its way through the East Coast and temperatures remain frigid through the Midwest, the technicals simply failed. Although storage draws going two and three weeks out have picked up, the technicals simply failed. The risk is still to the upside if this weather persists, but for now the bears hang their hat on knowing warmer weather is just weeks away.
Technicals: The failure yesterday budded throughout the session as it failed to hold above the 2.80 mark and failed below major three-star resistance. We now have major three-star support at 2.717-2.731 less on its strength and more because this level will keep the recent uptrend intact and a move below here will cause sharp selling.
Bias: Neutral
Resistance: 2.8233-2.837***, 2.983***
Support: 2.717-2.731***, 2.656**, 2.565**, 2.486-2.532****
10-year (June)
Yesterday’s close: Settled at 120’105, up 0’04 ticks
Fundamentals: Price action spiked on the in-line CPI read but ultimately settled back in where it was to prior within an hour. Although there was not an immediate reaction in equities to the Tillerson news, the combination of such with the White House announcing it wants to impose $60 billion in tariffs on Chinese technology products and telecommunications eventually brought the strong waves of selling in equity markets. This kept a bid under the 10-yearas the session unfolded. Still, price action remains very technical and in a consolidation ahead of next week’s FOMC Meeting. We have been discussing here that though Neutral the 10-year, we are expecting the yield curve to continue to flatten. The disappointing but not awful data has been very supportive to this; we expect more of the same over the coming months. Retail Sales and PPI are due at 7:30 am CT and Business Inventories are at 9:00.
Technicals: First resistance has kept the tape in check ahead of this morning’s data. A very well-defined wedge pattern is developing and a close out above first resistance or down below first support will cause a directional move of a half point or more.
Bias: Neutral
Resistance: 120’14**, 120’24**, 121’02**
Pivot – 120’01
Support: 119’265**, 119’00-119’14****
CORN (May)
Yesterday’s Close: Corn finished yesterday’s session up 1 ¾ cents, trading in a range of 5 ½ on the day. Funds were estimated buyers of 11,000 contracts.
Fundamentals: Not much new news on the wire in the last 24 hours which has kept prices tethered to important technical levels. South American weather continues to be a headline, but we are starting to turn our attention to developments in the states as we inch towards planting season. Prospective plantings will be at the end of the month, that will set the tone for things going forward. We will keep an eye on soybeans and wheat as they could have some spillover implications on price in the near term. Export sales will be out tomorrow morning, we will have those figures in tomorrow’s report.
Technicals: The market looked like it was in a position to make a run straight towards $4 yesterday but lost momentum on spillover pressure from the wheat market as we approached the afternoon. The manage held on to gains to close positive, settling right in the middle of our resistance pocket from 391 ¼-393 ¾. If the bulls can achieve a close above resistance today, we would expect to see momentum buyers step in and elevate prices towards 400 ¾-406. The RSI (relative strength index) is at 71 which is technically overbought so additional consolidation before the next move is very much possible. The bulls do not want to see a close back below 387, this would likely encourage long liquidation.
Bias: Neutral/Bullish
Resistance: 391 ¼-393 ¾***, 400 ¾-406****, 417 ¼-421 ½**
Support: 387***, 379 ½-382 ¾****, 376-376 ½**, 370 ¼-372 ¼***
SOYBEANS (May)
Yesterday’s Close: May soybeans finished the day up 6 ¾ cents, trading in a range of 10 ¾ cents for the day. Funds were estimated buyers of 9,000 contracts on the session.
Fundamentals: Weather continues to be a headline story, mostly due to the fact that there is not much else to report on at this point. There are chances for rain in Argentina later in the week, but we are in the camp that thinks it may be too little to late. Market participants will start turning their focus towards the Prospective Plantings report on March 29th and weather in the states over the coming weeks, the jawboning could help keep a bid in the market in the short term. Export sales will be out tomorrow, along with NOPA crush which is released at 11am cst.
Technicals: The market is working hard to recover losses from Fridays dramatic sell off. 1055-1059 was first support on the way down and will now act as first resistance. We feel this represents good selling opportunity on the first test. A failure at this pocket we believe would encourage long liquidation back down towards support with 1027-1030 being the first target. If the bulls are able to chew through this pocket on a closing basis that will change the tide an could lend hand to a run back above 1080. The RSI (relative strength index) is currently at 56.50 which is near the neutral mark.
Bias: Neutral/Bearish
Resistance: 1055-1059 ¾***, 1070 ¼**, 1080-1082 ½****
Support: 1027-1030****, 1013 ¾-1016**, 1001-1006***
WHEAT (May)
Yesterday’s Close: May wheat futures finished yesterday’s session down 5 cents, trading in a range of 13 ¼ cents for the day. Funds were estimated sellers of 4,000 contracts on the session.
Fundamentals: Prices were marching higher on the back of the poor crop ratings report Monday afternoon but turned midday to finish the day positive. Better chances for rain have worked their way into the forecast which led to the pressure. If these rains are realized, we could see the market continue to slide. If the rains miss, then we expect to see prices get back above the $5 handle in relatively short order. Needless to say, we are in a weather market so some of the other fundamentals and technicals have less significance than usual.
Technicals: The market is testing support again which is not what the bulls want to see. We liked buying support on the FIRST test, a revisit is not welcomed. We often compare price and technicals to a wrecking ball and a building, the more a level is tested, the weaker it becomes making it more susceptible to breaking down with each blow. If the market does break down below we would look for the market to test 464 ½-467 ¾. This pocket represents a key Fibonacci retracement level, previously important price points, and the 50-day moving average.
Bias: Neutral
Resistance: 494-495**, 516 ¾-518 ½***, 535-538 ¾**
Support: 478-481 ½***,464 ½-467 ¾**, 451-455 ½****
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