Chinese exports climbed 7.2% in August from a year earlier, the General Administration of Customs said in Beijing yesterday. That compared with the 5.5% median estimate of 46 economists surveyed by Bloomberg. Economists forecast the central bank will reduce its monthly $85 billion in asset buying by $10 billion at its meeting on Sept. 17-18. John Kerry stated over the weekend: “I don’t believe that we should shy from this moment; the risk of not acting is greater than the risk of acting.”
Equities: The SEP13 E-mini S&P 500 (CME:ESU13) is trading up 8.5 points to 1662.50, above a key short term 200-EMA at 1657. We believe this market is trading higher mainly because of positive economic data from Europe and China, but also in the wake of a nonfarm payrolls report last week that caused investors to have second thoughts about a tapering announcement this month at the next Fed meeting. We are looking at the 1684 level as a key resistance level. 1678 would be the level we think will be good resistance before 1684. We believe the overall trend is bullish, and we also think the market will likely not make any major moves higher before the mid-month Fed meeting. Also, the market could be susceptible to the downside if there is an official approval issued for limited military strikes on Syria. This could be the poison arrow to the market at this point.
Bonds: The SEP13 U.S. 30-year bonds (CBOT:ZBU13) are up 23 ticks to 129’24. This is interesting because the S&P 500 is up as well, and leads us to believe that the markets are potentially in a trade today dictated by a pullback in September tapering expectations. We have our next upside target approximately one point higher at 130’28 and key support at 129. We believe that this region below 130 could be a region from which the bonds have a small rally, especially if the Syria situation does escalate to a U.S. strike.
Currencies: The SEP13 U.S. Dollar Index (NYBOT:DXU13) has quickly reversed its bullish tone from last week and is now trading down 37 ticks to 81.79. We look at 82.50 as the key decision level for this market. As discussed, it looks like the overall markets are trading as though a September tapering announcement is less likely. Also, the other key currencies like the Aussie, the euro, and the pound are all higher today, with the British pound leading the way at 89 ticks higher than Friday’s close. U.K. Chancellor of the Exchequer George Osborne said Britain’s economy is turning a corner and is in the early stages of a recovery. We have 158.40 and then 159.75 as key upside targets for the pound. The SEP13 Aussie is also strong today, and we would not be surprised to see the Aussie break out higher above its key 92.50 resistance.
Commodities: The key commodities such as gold and oil are not experiencing big moves today, but OCT13 WTI crude oil (NYMEX:CLV13) is down below the $110 level today. It is trading down $.77 to $109.76. We focus on $110.22 as the key line in the sand for this commodity. If crude can stay above this level, we look for it to head higher to a technical target of $112.32. If it cannot stay above $110.22, we could see it head lower to $107.65. We are watching OCT13 sugar futures today. The global sugar surpluses for this year and the next are narrowing as rising population could mean accelerating demand in developing nations from Nigeria to China and Indonesia. The key level for OCT13 sugar (NYBOT:SBV13) is $16.95, and the breakout level looks like $17.30. Today sugar is up .10 to $16.90. We believe that the global growth story could mean sugar reverses its recent downtrend and could head higher above $17.30.