Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

By Chris Becker 

Risk markets are still in a holding pattern awaiting the Federal REserve latest interest rate meeting, with the focus on German unemployment – spiking unexpectedly – and US GDP growth which disappointed looking through the headlines. A big reversal and increase in oil inventories sent both WTI and Brent down to weekly lows, while on currency markets the USD fell back on the GDP print but gold and Bitcoin remain depressed.

Looking at the action on Asian markets yesterday, where the Shanghai Composite continued its pullback with a fall of nearly 0.5% to 2939 points, as the 3000 point level remains a too-hard barrier to break. Meanwhile the Hang Seng Index moved the same way, down 0.4% to close at 26659 points, as this stall below the previous weekly high and weekly downtrend line weighs in the short term, so continue to watch the low moving average at around 26500 points for signs of an inversion:

Japanese share markets fell into line as Yen strengthened against USD during the session with the Nikkei 225 closing 0.6% lower, taking back the previous gains to 22834 points.  Futures are suggesting a slight pullback this morning as momentum wanes here amid a stall in risk sentiment. Continue to watch the USDJPY pair and the low moving average level at 22600 points:

The ASX200 was the biggest loser, down 0.8% to close at 6689 points, finally breaking below the 6700 point barrier with the banking sector dropping over 1% and leading the selloff.  SPI futures are down a few points, reflecting 15 points as Wall Street stumbles, so this could translate into a further inversion below the low moving average:

European markets were dragged down by Spanish markets falling nearly 2% with the FTSE advancing slightly as the German DAX dropping 0.2% to finish at 12910 points. The multi-month resistance area at 12700 points continues to build as firm support, with last week’s price action and solid momentum pointing to a confirmed new breakout despite the Brexit shenanigans:

Wall Street is hovering before the FOMC meeting, putting in scratch session across the board, with the NASDAQ the weakest while the S&P500 is barely moving after a big gap down at the open was filled. Resistance at the 3000 point mark remains firm with the four hourly chart showing price almost anchoring back towards the multi week resistance level as the recently way overbought price action is now morphing into a proper pullback:

Currency markets are showing signs of further weakness in USD with Euro picking up and getting through the dual German prints and firming above the 1.11 handle overnight. This still keeps it below the downtrend line, but momentum is now nicely overbought and ready to re-engage higher, so I’m watching for a breakout above trailing ATR resistance:

The USDJPY pair is trading in a relatively wide range, still unable to get above the 109 handle as USD weakness rather than poor risk sentiment and hence Yen buying keeps the pair anchored here.  Local support at the trailing ATR level at the 108 handle continues to build in the medium term as the session low shows with momentum holding on:

The Australian dollar continues its bounce from the Monday morning open off the 68 handle despite lower commodity prices with a matching high from last week’s starting point just below the 69 handle overnight. Momentum is nicely overbought now and ready to breakout but there is a possibility of a pullback if the Fed disappoints, so watch for a break below the low moving average at the 68.50 level:

Oil prices dropped significantly as a big draw in inventories so both Brent and WTI losing nearly 2% with the latter contract at the mid $54USD per barrel level. The daily chart had been building a series of higher daily low’s, but significant resistance at the $60 level continues to hold it back, with the potential to break down to $51 or so:

Finally to gold, which after recently bouncing off daily ATR support and breaching $USD1500 per ounce has again failed to find any buying support and remains anchored here just below that key level. Key support at or about the $1480 level must hold here, as the false breakout seems confirmed:

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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