Macro Afternoon

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by Chris Becker

Deflationary forces are still in play in Japan somewhat although higher energy prices are helping alongside a very tight employment market (low population growth helps – hello Canberra!) Markets in Asia finished the week meekly with a lower USD not helping outside China. The trainwreck that is the Trump White House is also weighing on US confidence.

In mainland China the Shanghai Composite closed only a few points higher to 3254 points, still above previous resistance, now support at 3200 points as it reaches for the obvious 3300 point level. The Hong Kong based Hang Seng Index is finally having a retracement, falling 0.6% after its recent breakout move above 26,000 points:

Japanese stocks reacted as expected from the stronger Yen and CPI print, with the Nikkei finishing down 0.6% to break below the psychological important 20,000 point level which is firming everyday as significant resistance. The USDJPY pair is barely holding here just above the 111 handle where I’m continuing to watch the weekly session low at the 110.60 to possibly come under stress tonight:

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S&P futures are hesitating as the White House sleaze oozes out and the Republican controlled Congress can’t organise or get any legislation through, amid some mixed earnings but good macro economic news. The volatility of last night could return – so watch out! (again, the Becker Holiday Rule applies here…expect high volatility as I take a break from day trading the next two weeks filling in for Houses and Holes)

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A bath of blood on the ASX200 today as end of month and positioning for next week’s earnings reports saw a big selloff driven by bankstocks, with the broader market off nearly 1.5% holding just above 5700 points. Again, what a great time to take a break trading…

The Aussie dollar was basically unchanged throughout the Asian session, this may change tonight as volatility starts to build in correlated markets. The 79 handle remains 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:

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The data calendar concludes the week with two big ones – German CPI (the only inflation figure that counts at the ECB) – plus US 2Q GDP.

I’ll be back Monday with Trading Week and filling in for Dear Leader Houses and Holes as he takes a break. Expect volatility to rise as it always done when I take a step back from the markets!