Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

By Chris Becker 

Friday night saw a big reversal in USD as the long awaited US unemployment (non-farm payroll or NFP) print for December showed a much less than expected pace – only 145K jobs created – with a subsequent risk-off mood on Wall Street. Undollars like gold and especially the Australian dollar broke higher on the disappointing print, with stock futures indicating a wobbly start to the trading week here in Asia.

Looking at Asian share markets performance on Friday first, where the Shanghai Composite put in a scratch session, closing less than 0.1% lower to 3092 points, while the Hang Seng Index also hovered along without much upside, finishing only 0.2% higher at 28603 points. The daily chart shows price action very well supported and remaining above the high moving average with momentum still in overbought mode which should support a continued uptrend:

Japanese share markets simmered down, in sympathy with the slowdown in the Yen selloff against USD with the Nikkei 225 putting in a modest 0.4% return to 23833 points.  While price is supported very firmly at the 23000 point level, there may not be much potential upside with the former high at 24000 not far away, and the dip in USDJPY is suggesting a poor start to the trading week – more sideways?

The ASX200 was the best in the region, making a new record high by closing 0.8% higher to 6929 points. Go stocks – but probably that’s it for the rest of January! SPI futures are down over 50 points or nearly 0.8% on the Wall Street selloff as the Aussie dollar spikes, so this new record high looks to be fleeting in the short term:

European markets finished the week with very weak sessions across the continent with the German DAX putting in a scratch session after being quite positive at the start, finishing at only 13483 points. Daily support at 13000 or so remains a very solid, longer term uncle point here, but the previous upside resistance at the 13450 level is only hesistantly broken. I’m watching for another session above the high moving average and to see how a higher Euro affects these markets:

Wall Street put the brakes on post-NFP but even a cursory glance at the charts shows only a mild retraction with the S&P500 only pulling back 0.3% to 3265 points. The daily chart shows that while price is still above previous resistance at 3254,  overall price is still way overextended and ripe for a pullback:

Currency markets were the biggest movers however with Euro bouncing off the 1.11 handle after a deflated selloff during the latter half of the week. The bullish falling wedge pattern presaged this reversal with firm support at the 1.1080 level in the short term as I keep noting that the union currency is still in a cycle between the 1.10 and 1.12 levels, so don’t get excited until overhead ATR resistance at 1.1140 is broken:

The USDJPY pair matched but could not exceed the previous daily/weekly high at the 109.60 level in a classic deflation following a quick relief rally and reversed somewhat on Friday night.  This should be a minor headwind for domestic Japanese stocks in the short term but those winds could build if that former high is not beat soon. I’m watching for a possible swing play lower on momentum inversion:

The Australian dollar finally found some life after barely holding on and proving almost immune to any USD strength meme, bursting out of its tight range on the NFP print to almost break through both the 69 handle and overhead ATR resistance. Momentum is not yet positive either so while the price size move is good on the face of it, the technicals are not clear yet for a bull run as hesitation around the direction of the RBA is still building:

Oil prices continue their selloff but again in a deflated way, with the WTI contract getting back to the $59 per barrel level. This is not yet a full selloff even though price is now well below daily ATR support and momentum has inverted, I still contend this move should settle around this level as part of a weekly uptrend:

Finally to gold, which continued to show the most excitement and after spiking above $1600USD previously, settled and then firmed to finish the week on a very good note at the $1561USD per ounce level. The daily chart is still in a bubble like phase, requiring a steady hand in the next couple of days or some minor falls down to the $1500 level before picking up again, or watch the short positions pile in:

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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