Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

By Chris Becker 

Wall Street pulled back slightly overnight with a mixed Europe also weighing on positive sentiment as retail data disappointed and UK CPI came in lower than expected. Lack of news on a looming Brexit deal kept the continental currencies elevated slightly, while the US retail sales print saw USD flop, spiking Aussie dollar and giving gold a little more hope.

Looking at the action on Asian markets yesterday, where the Shanghai Composite spiked on the open but couldn’t hold the gains after the long lunch break, closing 0.4% lower to 2978 points while the Hang Seng Index went the other way and has gained over 0.6%  to 26668 points and looking to make another attempt at cracking resistance at 27000 points  Momentum is gaining here above the positive level, so I’m watching the high moving average as local support for a possible breakout:

Japanese share markets advanced on the previous overnight weaker move in Yen and the positive sentiment overall with the Nikkei 225 closing 1.3% higher at 22501 points. The daily chart is still showing another classic bubble like blowout but futures are indicating a pullback today on the poor Wall Street results so consolidation will be the name of the game here:

The ASX200 was also a big mover, finishing 1.2% higher at 6736 points helped by the continuing weak move in the Australian dollar. SPI futures are down nearly 15 points to take some heat out of this move as the Aussie dollar spiked overnight, so the market should remain just below the September highs:

European stocks were all over the place overnight as the various CPI prints and then the US advanced retail sales numbers took the heat out of the positive sentiment that has been building. Nevertheless, the German DAX finished some 0.3% higher to 12670 points, building on its recent breakout. The solid horizontal upper black line on the daily chart shows the previous high from the June highs, so even the longer term position should move to a more positive mood as this short term rally gains steam:

Wall Street was moody to say the least with a slight retreat across the main bourses, with the NASDAQ losing 0.3% while the S&P500 finished 0.2% lower to remain below the 3000 point mark. The daily chart was building into a stable price pattern for a return to the September highs, but hurdles are mounting here:

Volatility on currency markets remains modest, with Pound Sterling again providing most of the opportunity while Euro jumped to a new weekly high as the USD fell on the back of the poor retail sales print. The four hourly chart shows a re-engagement back above the previous session highs, getting above the 1.1070 previous high of last week. Momentum is now well overbought and ripe for a pullback but the overall trend for the union currency remains up:

The USDJPY pair didn’t fall back as much as other undollars, with Yen buyers remaining on the sidelines as the pair was steady at the 108.70 level after recently clearing local resistance at the 108.40 level. Momentum is only slightly overbought so there is potential for more upside here:

The Australian dollar was a big benefactor to the retail sales print with a nice breakout above the downtrend line from the Monday morning gap down level, but it looks temporary at beast. Price got back above the previous ATR support level and back to the mid 65’s but today’s unemployment print if disappointing could see the 67 handle once taken out completely:

Oil still can’t get any satisfaction with a staid session seeing the WTI contract remain just below the $53USD per barrel level again overnight, keeping the market quite depressed. Again, no pattern hereto give rise to any long standing long positions – swing trading only:

Finally to gold, which remains under pressure and is still below the downtrend line as it hovers around previous daily ATR support at the $1489USD per ounce level. I would still contend we’re moving to the previous resistance level at $1425 as part of a bull market dip:

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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