Beige Cloud Cover
The “Beige Book” survey of economic conditions from the 12
District Banks of the Federal Reserve yesterday is having a hangover effect
on financial futures.Â
The survey painted the picture of an economy stymied by a weak
manufacturing sector and cast doubt about a recovery any time soon. Since the
prospects for recovery in the US now seem even further afield than
previously believed, traders are selling September dollar index futures
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PowerRating)
and buying Momentum-5
List member
Swiss francs
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PowerRating) and recent member
euro FX futures
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PowerRating). Both contracts surged and are rallying to new
three-month highs as prospects for an economic recovery in Europe seem,
temporarily, better than in the US. The European Central Bank, the Fed’s
cross-Atlantic equivalent, said it would “monitor” interest rates
in light of Europe’s own economic slowing. The implication here is that the
ECB will lower rates from their current 4.5%.Â
Also from the
New 10-Day Highs List, the Japanese yen
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PowerRating) is surging to a
six-week high in an expansion bar that is convincingly taking the yen out of
its bottom-of-the-range consolidation. Notice how the Swiss franc and the
yen, from the M-5 and 10-Day High lists, qualify for Off The Blocks
entries and are working out where the ECU1 is not on these lists today and
would not have worked out.Â
Also from the Momentum-5
List, T-bonds
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PowerRating) made good on an Off The Blocks
start and are consolidating in a narrow-range pattern on their high in a
possible Slim Jim. The next Resistance Level From The Bond Pit is 104 19/32.
Sporting the same upside momentum and making good on the same setup as
T-bonds, francs and yen, September cocoa
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PowerRating) has rallied
since the opening bar and is currently breaking out to its high of the
day.