Macro Morning

See the latest Australian dollar analysis here:

Macro Morning

By Chris Becker 

A holiday on Wall Street and the lack of any economic data or macro news kept risk markets at bay overnight with the USD also little changed.

Looking first at the action on the Asian session yesterday, the Hong Kong Hang Seng Index closed 1.6% higher to 28281 points with the uptrend well intact. This rally is steadily building above the previous false break high at 27300 but needs to beat last week’s intrasession high and for momentum to stay in the slightly overbought zone for it to continue:

Japanese stock markets put on a very solid show as well, with the Nikkei 225 closing 1.8% higher at 21281 points. This again clears substantial resistance at the 21000 point level with the daily chart signalling a clear breakout, however its still dependent on a weaker Yen, but momentum is nicely overdone for as risk correlation overrides the currency correlation lag:

The ASX200 was the weakest in the region, unable to hold onto significant gains earlier in the session, closing only 0.4% higher as banks dragged the bourse down, closing at 6089 points. The overbought nature and price action is suggesting a mild rollover back to 6000 with SPI futures flat due to the lack of a lead from Wall Street:

European stocks started flat and stay depressed throughout the whole session with the lack of a US lead and any economic data not helping to imbibe the bullish spirits. The German DAX closed exactly flat at 11299 points, unable to break the previous bounce high at 11350 although momentum is still positive on the daily chart so there is still potential to get there:

Wall Street was closed due to the President’s Holiday (I’m sure they’ll change that after Trump leaves!) so only futures activity to report here on the S&P500 which is still holding on to its recent gains. The daily chart shows a great setup for more gains here with my next target at the 2800 level still intact:

On to currency markets which were quite subdued as the Euro rose slightly to maintain itself slightly over the 1.13 handle, with most of the rally happening in the Asian session. It’s coming up against firm resistance at the 1.1320 level which is likely to be rejected as it was last week, as I still contend the longer term move is 1.12 or even 1.10 level:

The USDJPY was also flat as a pancake, sitting on the mid 110’s all night long. This is setting up for a possible surge today on the open, but again no economic prints to deal with on the calendar so we could be in for another flat session as prices tighten with the moving average band on the four hourly chart:

The Aussie dollar gapped higher on the Monday morning open but then lost all that and more in the wee hours of the morning to revert back to the 71.30 level against USD, matching last week’s high. The sudden reversal was likely on reduced volume and lack of risk correlation, but could set up for a reversion back down to last week’s lows at the 70.50 level:

Oil was were the action was again with another breakout overnight lifting the WTI contract to close well above the $56USD per barrel level. Another weekly and monthly high and this continues to support a surge back to the $60 level with obvious support at $51:

Finally to gold, which had been sliding slightly sideways but also put in another new daily/weekly/monthly high, hitting the $1326USD per ounce level overnight. My original target of $1350 is almost there!

Glossary of Acronyms and Technical Analysis Terms:

ATR: Average True Range – measures the degree of price volatility averaged over a time period

ATR Support/Resistance: a ratcheting mechanism that follows price below/above a trend, that if breached shows above average volatility

CCI:  Commodity Channel Index: a momentum reading that calculates current price away from the statistical mean or “typical” price to indicate overbought (far above the mean) or oversold (far below the mean)

Low/High Moving Average: rolling mean of prices in this case, the low and high for the day/hour which creates a band around the actual price movement

FOMC: Federal Open Market Committee, monthly meeting of Federal Reserve regarding monetary policy (setting interest rates)

BOJ/Abenomics: Bank of Japan, economic policy/direction enacted by PM Shinzo Abe

DOE: US Department of Energy 

Uncle Point: or stop loss point, a level at which you’ve clearly been wrong on your position, so cry uncle and get out!

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