Macro Afternoon

Advertisement

The US mid-term elections – or divorce proceedings in other words – have caused a bit of havoc on risk markets here in Asia, with currencies the most volatile. The USD has moved around substantially against both Aussie and Yen while the Kiwi rose significantly on a very good employment report, making tomorrows RBNZ meeting quite a live event.

The Shanghai Composite is off 0.6% going into the close, currently at 2643 points, still just above key support at the 2600 level but unable to translate the recent swing gains into a proper recovery. The Hang Seng Index is also slipping, down 0.25% to 26055 points, still playing around the previous support level at 26000 points. The daily chart still has some upside potential but resistance at 26500 points is telling:

Advertisement

US and Eurostoxx futures are rising , with the four hourly S&P 500 futures chart ready to trying and exceed Friday night’s session high, still respecting tentative ATR trailing support at the 2700 point level. With a house divided in the US, this could be a tricky session to predict. Longer term it’s fairly safe to say Trump’s legislative agenda is finished but the market could get a short term boost from another round of tax cuts and profligate Republican spending before the new Congress is sworn in:

Japanese stocks have been caught up in the risk maelstrom and haven’t returned to any form of confidence, the Nikkei 225 pushed about 0.3% lower to 22084 points. The USDJPY pair has seen some fairly wild volatility throughout the session, almost breaking out to new highs, while also dicing with support below the 113 handle. This looks set for another rally but I’m cautious to see what the City and Wall Street’s reaction to the US election brings:

Advertisement

The ASX200 has contiunued its upside action, waving off a stronger Aussie dollar to finish the day up 0.4% to 5896 points, just shy of the previous support level at 5600. The Aussie dollar is really building here in the wake of a weaker USD, but note how each candle is signifcantly wider than the last – not a good sign for volatility!

Advertisement

The economic calendar is relatively quiet tonight but watch out for the DOE oil inventory reports given that oil prices have been in correction mode for so long.