See the latest Australian dollar analysis here:
Following the ugly finish to last week on risk markets around the world, a new month and season hasn’t seen any fresh starts here in Asia as shares extend their slide across the region. Risks are mounting in every direction, with trade concerns doubling down on Trump’s Mexican tariffs and ongoing Brexit saga while slowing economic activity in South Korea and Japan are causing even more uncertainty.
The Shanghai Composite is set to close again below the critical 2900 point level, falling 0.4%, while the Hang Seng Index is down nearly 0.3% to 26829 points, still unable to arrest the recent decline. The daily chart had been showing a deceleration pattern with a target at the 27000 point level but poor sentiment is weighing too much on this risky market:
S&P and Eurostoxx futures are down 0.7% or so going into the European session with the four hourly chart of the S&P500 chart suggesting another new daily low to start the new month, still well below key terminal support level at 2800 points. This level continues to signal a major correction as the completion of a very bearish head and shoulders pattern on the longer term charts:
Japanese share markets are down the most, with the Nikkei 225 1% lower at 20410 points, almost ready to tackle the key terminal and psychological support level at 20000. There is still no bottom in the USJDPY pair with a fall back to the 108 handle during today’s session after a big fall on Friday night, as overhead resistance and risk-off avoidance is sending Mrs Watanabe to the domestic safe haven currency:
Australian stocks finally stepped in line with their Asian brethren, the ASX200 falling nearly 1.2% lower at 6320, finishing well below previous support at 6400 points. The Australian dollar continues its strange blip higher despite the poor sentiment, getting above overhead resistance at 69.20 as all traders position for tomorrows RBA meeting, where a cut is expected:
The economic calendar starts the week and monthly calendar with a big print tonight – US ISM Manufacturing.