by Chris Becker
Asian markets are in a bit of a tizz going into the slower Xmas season, mainly on the back of the Chinese seizure of a US drone which was a good a catalyst as any for the USD rally to calm down a little. As a result, Yen has rallied keeping the lid on exuberant Japanese share traders, while commodities like oil and gold are having a resurgence albeit temporary.
The Shanghai Composite broke below key support on Friday at 3140 points and remains under that level going into the close currently at 3117 points. My target for this correction is terminal support at 3000 points. The Hang Seng is doing far worse, down nearly 1% as it broke its key support level at 22000 points on Friday and making good on that rout now, with a full correction now in place:
In Japan, the Nikkei and Topix are putting in scratch sessions as the Yen firms against USD slightly. The USDJPY pair is correcting as expected, now down below the 118 handle as the USD rally takes a pause:
S&P Futures have bounced on the Monday morning open so we should see a better sign tonight with my target to breach the upper trendline on the hourly chart at 2260 points:
The ASX200 is defying the rest of the region, up half a percent as the ratings agencies affirm the AAA rating of a triple CCC MYEFO budget from GrandMasterGlitch Morrison. Bank stocks were mainly behind the push, although oil stocks are helping too as the WTI price heads back above $52USD per barrel again.
The Aussie dollar however is not believing the “good” news around the AAA retention and is basically stagnant at 73 cents and looking very weak here going into the London open:
The data calendar starts the week quietly tonight with the German IFO survey and preliminary services PMI from the ‘States overnight.