The Precise Take – Equities up on US Dollar weakness

Leaders Analysis: The US Dollar is down materially overnight, making fresh monthly lows against the Euro and Swiss Franc.  Not surprisingly, gold and equities are up, with the ES retesting contract highs and confirming the EuroYen breakout through resistance yesterday.

Treasury Analysis: Today is the first of the Note auctions this week, with the 2 Year at 1:00 pm.  A poor showing could propel equities higher, but the reverse is unlikely to move equities materially.  The end of month auctions went well last month and we expect no different this month.  If there is to be any weakness, it is likely to be today, with the 7 Year on Thursday expected to be the strongest.  Tomorrow is FOMC day, historically bullish.  Assuming no disaster today, we would expect to see new highs in the ES- tomorrow early, if they are not achieved today.

Trading Today: Shorting into the daily gap/pivot area of 1058.25 to 1060.50 is a bit dangerous at these levels and we would prefer to go long at 1063.00, if it is reached within the first hour.  Above contract highs at 1071.50, and we are outright intraday bullish, watching 1080.00 to 1080.75 as a potential reversal area, but not willing to…

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