Following the very positive finish on Wall Street on Friday night, risk markets here in Asia have popped higher, with the Australian dollar advancing strongly, albeit on the tightening yield spread with US Treasuries. The Federal Reserve meeting this week will affect sentiment, along with a series of important economic releases – let alone the Brexit saga – so currency markets are the key to volatility.
The Shanghai Composite is soaring back to life, lifting well over 2% higher to close at 3092 points. The Hong Kong Hang Seng Index meanwhile is up about half that, just over 1% higher making good on last week’s breakout above 29000 points, and looking ripe to follow through here on the daily chart:
US and Eurostoxx futures are up firmly as markets regain confidence. The S&P 500 four hourly chart is looking to follow through on gains above the 2800 point level:
Japanese stock markets are up solidly despite a strengthening Yen, with the Nikkei 225 closing 0.6% higher to 21584 points, making a new weekly high and a good start to the trading week. The USDJPY pair has paused here at its Friday night retracement level at the mid 111’s, unable to make any headway. Despite the bearish look, momentum remains positive as does the medium term trendline which remains on the up:
The ASX200 had a more modest session, held back by the advancing Aussie dollar, closing only 0.25% higher to 6190 points as the 6200 point level beckons once more. The Australian dollar has shot out the gate on a risk-on correlation move, pushing right through the 71 handle and setting up for an attempt through the upper downtrend line. This is a very interesting and unexplainable move – excepting the bond yield tightening, which squeezed even more today – with numberwang on Thursday the real clincher:
The economic calendar starts the week slowly with a handful of Treasury auctions tonight and not much else.