by Chris Becker
As the USD trawls a new yearly low, Asian currencies lift and weigh down their respective domestic bourses with Japanese and Australian markets steady. With a Fed reluctant to raise rates in the face of a non-inflationary threat of any gross spending by Congress or the White House, this should give US stocks another lift as earnings season rolls on.
In mainland China the Shanghai Composite was way down before lunch but has recovered to finish just in the green at 3249 points, still above previous resistance, now support at 3200 points. The Hong Kong based Hang Seng Index is doing a lot better, up nearly 1% to be at 27149 points, making good on its recent breakout above 26,000 points. While I still consider a retracement possible due to overbought momentum, it seems this market is getting ahead of itself and bubbling higher, setting up for a blowoff reversal instead:
Japanese stocks didn’t do too bad considering the huge headwind of a stronger Yen overnight, which weakened only ever so slightly in the Asian session. The Nikkei finished up 0.1% to remain just above its psychological important 20,000 point level which is proving elusive to significantly break through. The USDJPY pair is hovering just above the 111 handle after last nights FOMC meeting slamfest. I’m watching the weekly session low at the 110.60 to possibly come under stress tonight:
S&P futures are slowly rising as more earnings are released tonight – which should see another break higher with the four hourly candles continuing to make higher lows:
The ASX200 started the day well but has ended up only 0.1% higher to 5785 points, underperforming against the rest of the region. Most of the major bank stocks were equally muted while BHP advanced over 1% on the back of better copper prices.
The Aussie dollar continues its breakout on the back of the FOMC meeting, consolidating above the 80 handle against USD. The 79 handle is now the short term Uncle Point which looks to be firming up here even as the four hourly and hourly price action sets up for a small retracement:
The data calendar continues tonight with US durable goods orders and trade balance figures for June.