Macro Afternoon

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by Chris Becker

Stocks in Asia are taking a pause due to new North Korean tensions even after US stocks took out new record highs overnight. The Aussie dollar fell after the RBA maintained its low interest rate dogma to sustain growth – in house prices at least.

In mainland China the Shanghai Composite is steady going into the close, currently at 3376 points going into the close, still rejecting that key resistance level above at 3400 points. The Hong Kong based Hang Seng Index is finally having a pause, up slightly to be at 28720 points as this rally continues to new heights:

S&P futures are flat as Asia closes as the pennant pattern on the four hourly chart tightens:

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Japanese stocks continue to do well with the Nikkei up nearly 0.4% to close at 21336 still continuing the blowoff and going way above overbought levels. The Monday morning gap higher has been filled and then some by the USDJPY as the 111.60 to 111.80 support zone has been respected firmly. My expectations for a retreat once it hit the 112 handle have not been filled, so this bears watching tonight for another breakout:

The ASX200 continues to do well, still advancing after its recent breakout and soaring 0.7% higher to be at 5889 points, staying well above the 200 day moving average and almost hitting my next target at 5900. The banks again are doing the heavy lifting here with CBA up 1.4% and Rio Tinto up similarly as it continues its rally.

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The Aussie dollar has stabilised here at the mid 78.50 level going into the City open, staying just below the low moving average on the four hourly charts after failing to make a new high post the usual Monday morning gap and responding poorly to the latest RBA minutes. For it to regain its strength, it needs a solid move above the 78.60 or so region:

The data calendar ramps ups overnight with a big focus on the UK and Europe. First is Governor Carney speech/testimony to the Treasury, then the latest UK CPI print and house price data, which will likely shake up an already shaky British Pound. For Europe its their latest economic ZEW survey for Germany and the continent.

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