Macro Morning: Risk awf

By Chris Becker

Risk markets flopped last night even as German unemployment went down, UK GDP surprised on the upside but EZ CPI indicated a further slip into deflation across the continent. The moves down were probably end of month and quarter repositioning with no macro or central bank talkfests catalysts providing an answer.

To recap Asia’s moves in yesterday’s session, the Chinese bourses took the day off, with the Shanghai Comp down 1% after hitting a new seven year high intrasession, while the Hang Seng treaded water. Big opportunity here for the brave shorters, but remember stock bubbles can extend another 20-50% after even everyone agrees its a dangerous bubble..

The ASX200 shrugged off the continuing crash in iron ore with all the major miners and bank stocks rallying, pushing the local bourse back up but only temporarily. SPI futures indicate a big reversal today although April 1st toomfoolery, including believing there’s going to be a profitable iron ore sector (or even a viable commodity complex) could push the bottom pickers.

The Eurostoxx index took back most of the previous gains, down 1% but again the FTSE is lagging as the UK election campaigns mounts up and daily volatility – hence uncertainty – rises. The FTSE lost nearly 2% so my short term swing call looks pretty poor here, but the longer term picture is very bearish as the bourse is right on its support, with a break below looking ominous:

Chart FTSE100, D1, 2015.03.31 22:12 UTC, VantageFX Pty Ltd., MetaTrader 4, Real

The DAX fell 1% and maybe completing a bearish double top here with clear support the entry point for a short position, but hard to fight the ECBQE program which has just started:

Chart DAX30, D1, 2015.03.31 22:13 UTC, VantageFX Pty Ltd., MetaTrader 4, Real

US stock losses were broad based, indicating potential quarter end repositioning, with the S&P500 down 0.9%, with the daily chart indicating a distinct lack of positive momentum as market participants remain uncertain in a post-no QE environment.

Chart SP500, D1, 2015.03.31 22:16 UTC, VantageFX Pty Ltd., MetaTrader 4, Real

Hence, it was a return to the US dollar and US bonds, with 10 year Treasuries bought strongly and yields falling 2 basis points to 1.92%, with Aussie 10 years not far behind at 2.32%

The US Dollar Index (DXY) was up 0.5% continuing to re-strengthen as Euro fell over again, dropping straight through the 1.08 handle down to 1.074, soldifying the breakdown of its recent uptrend:

Chart EURUSD, H4, 2015.03.31 22:20 UTC, VantageFX Pty Ltd., MetaTrader 4, Real

There is a potential short term upswing here on oversold reversion to mean, but the downside target of parity remains on the longer term game.

Cable (GBPUSD) remains volatile and finished the session at last week’s 1.48 low while in Yen trade, the USDJPY pair is consolidating above the 120 handle, almost ready to breakout here above its downtrend line:

Chart USDJPY, H4, 2015.03.31 22:24 UTC, VantageFX Pty Ltd., MetaTrader 4, Real

The Aussie was again dragged down overnight briefly seeing the 75 cent handle against the USD, falling from 76.50 on the Monday morning open. Its looking well oversold here on the four hourlies with a potential upswing forming, although this could be crushed by todays Chinese PMIs.

Chart AUDUSD, H4, 2015.03.31 22:27 UTC, VantageFX Pty Ltd., MetaTrader 4, Real

The commodities complex was mixed again with gold the “winner”, only losing $1USD or so per ounce, while Brent crude tumbled 2% to just above $55USD per barrel while the WTI contract continued to gyrate around the $48.70 point of control although negative momentum following the break of its uptrend is increasing. I’m watching support at $47.25 for a short position here:

Chart CL-OIL, H4, 2015.03.31 22:30 UTC, VantageFX Pty Ltd., MetaTrader 4, Real

Today the data focus shifts to the Asian session with Chinese manufacturing PMIs around lunchtime the big one to watch, especially holders of AUD and Aussie shares. The other major one is in the US session, with the ISM Manufacturing PMI release for March.

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