by Chris Becker
Risk markets are loving the latest employment figures from the US, as Asia reacts to a new round of Abenomics, as Shinzo Abe wins local elections in Japan. This sent Yen through the floor against the USD and other majors, sending the Nikkei 225 up nearly 4% and helping lift other bourses throughout the region. USDJPY rose nearly 200 pips on speculation that a new round of stimulus will soon hit Japanese households, potentially reversing the current uptrend in the local currency:
This is early days, perhaps too early as USDJPY needs to breach at least 106 or higher before the daily downtrend is broken.
The Aussie dollar stayed around 75 cents against the USD on the Monday morning gap (Dog, I hate weekends for FX trading) while it too rose against Yen, nearly but not breaching last weeks high at the 77 handle. Following the risk-on mood, AUDUSD is poised to break above the upper edge of the triangle pattern forming on the daily and weekly charts with a target up to the April high at 78 cents as no one seems ready to believe the ratings agencies just yet:
Before we get to stocks, a quick look at commodities. Oil is slowly falling as we move into the London session with WTI down below $45USD per barrel while gold gapped down around $8USD to $1363USD per ounce. Interestingly, silver is forming a potential double top on the four hourly/daily charts, unable to breach significant resistance at the $21USD per ounce level. I’m targeting as low as $16 on a retracement here:
The Shanghai Composite is currently just above 3000 points in a steady session while the ASX200 soared 2% to 5337 points to its highest level in over a month, as the realisation that the Coalition looks set to take government and of course, following the risk on move from Friday night.
Gold and coal miners are the biggest movers today with Whitehaven Coal doing another 8%, while mineral sands extractor Iluka (ILU) was up over 10% on a broker upgrade on potentially better production results. The daily chart shows that price has now broken to the upside of the symmetrical triangle where the miners has been struggling to make significant headway amid its bear market. The next level to beat is $8 per share:
The data calendar is almost empty tonight, basically a wafer after digesting the big load on Friday night, with Swiss property data and some 2nd tier labor info from the ‘States on the menu.