Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

By Chris Becker 

A mixed night on risk markets with the positive sentiment fading goign into the weekend, as no news on a US/China trade deal is construed as bad news. Wall Street ended with a scratch session while European bourses retreated slightly in the wake of flagging retail sales numbers. The USD was weaker against most of the currencies as Pound Sterling spiked again, while oil prices pared back some of their recent gains. Tonight’s NFP print will set the tone for the rest of the short trading month.

Looking at the action on Asian markets yesterday where the Shanghai Composite lifted 0.7% and closed just one point shy of the 2900 point level again as it builds up momentum. The Hang Seng Index staved off another breakdown, closing 0.6% higher to 26217 points with the daily chart still looking bearish as price is unable to get back above the low moving average at the 26400 points level. While momentum remains quite oversold, it’s still in the zone for further falls:

Japanese share markets fought back after a recent stumble despite not much of a rise in the USDJPY pair during the session, with the Nikkei 225 closing 0.7% higher to 23268 points, remaining well clear of daily support at the 23000 level. Trailing ATR support continues to be respected during this consolidation,with futures indicating a small bounce this morning, but again not enough to breach the high moving average which is providing firm medium term resistance:

The ASX200 was this the biggest winner yesterday, shooting 1.1% higher to 6683 points on the back of major gains in bank stocks. That maybe all she’s got Captain as SPI futures are up only 8 points as traders await tonights NFP print for a direction. The 6700 point level is likely to prove firm resistance here while 6600 remains a decent uncle point for the bottom pickers:

European markets continue to be weighed down by upside despite volatility in domestic currencies with the German DAX retreating 0.6% or so alongside the markets on the continent, but still above key support at the 13000 point level. Momentum readings are now moving into neutral territory, with short term price action suggesting a further decline or anchoring at the 13000 point level:

Wall Street is trying to get out of its funk but last night was all about positioning going into tonights unemployment print with the S&P500 gaining only a handful of points to close with a scratch result above the 3100 point former support area. The four hourly chart shows a move back to the previous ATR trailing resistance level but without any positive momentum or catalyst this could be a pause before another dip down:

Volatility in USD continues with Pound Sterling spiking again to a six month high above the 1.31 handle while Euro finally got back over its own 1.11 handle to match its mid-week high. The four hourly chart is transmitting a double top pattern here however, with momentum well overcooked and ripe for a pullback going into tonight’s VIP NFP print – watch the low moving average and the previous session lows at 1.1070 especially:

The USDJPY pair tried to bounceback overnight but failed when it hit the 109 handle, rolling over in the wee hours of the morning. The overall move remains down with little chance of a short term bounce for risk assets here in Asia as momentum remains in the doldrums, so watch for a potential return to the mid week lows below the 108.50 level:

The Australian dollar suffered a similar fate, again finishing below the mid 68 level as upside resistance proves too hard to beat. The four hourly chart is slowly melting down to previous support/resistance pre-RBA meeting at the 68.20 level which bears (sic ) watching tonight:

Oil prices tried to make good on their recent breakout but had a very tight scratch session instead, with the WTI contract up staying just above the $58USD per barrel level. The daily chart shows how the session highs are now all matched and ready to breakout again and this lack of volatility presages such a move but I’m still wary of a return to a strong USD that could wipe out sentiment:

Finally to gold, which is just holding on to its own recent breakout gains hovering at the $1477USD per ounce level, almost back to prior support now firm resistance at the $1480 level.  A sustainable trend needs to take out that resistance level, plus trailing ATR  and then the psychologically important $1500 level before getting excited:

 

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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