Macro Morning

See the latest Australian dollar analysis here:

Macro Morning

By Chris Becker 

Risk markets are trying to make new record highs again but the slightly softer than expected CPI print in the US overnight shook up the complex, with mixed results on Wall Street and scratch sessions across the European continent. Currency markets were generally contained with the majors not moving much while Pound Sterling lifted and the Australian dollar kept at bay.

Looking at Asian share markets yesterday, where Chinese stocks absorbed the big rise in Yuan with the Shanghai Composite slipping going into the close to finish nearly 0.3% lower to 3106 points. Meanwhile the Hang Seng Index did a similar retracement, falling 0.3% to close at 28862 points. The daily chart shows price action was getting a little ahead of itself by remaining well above the high moving average so a retracement is welcomed as momentum gets ahead of itself:

Japanese share markets reopened after a long weekend with the Nikkei 225 advancing due to a much weaker Yen, closing 0.7% higher to 24025 points. I still contend there may not be much potential upside with the former high not far away, but watch the positively correlated USDJPY for signs of continued support:

The ASX200 was the best in the region, nearly closing at 7000 points by lifting some 0.8% to 6962 points. SPI futures are up just 5 points on the mixed session on Wall Street as the Aussie dollar cools down somewhat, so we’re likely to get a second round of matching the previous record high before another breakout:

European markets continued their wobbly start to the week with no real direction, as the CPI print confused risk takers. The German DAX put in a scratch session to finish at 13456 points, still unable to gain any traction here at the previous upside resistance level at 13450 points, which remains only hesitantly broken. I’m still watching for another session above the high moving average and to see how a higher Euro affects these markets:

Wall Street paused on its epic rise, with the S&P500 slipping 5 points or 0.1% to 3283 points with the NASDAQ falling a little more. The four hourly chart shows hesitation here below the 3300 point level but even ase overall price is way overextended, you can’t hold back a hyper bull market:

Currency markets absorbed the poor US CPI print without much movement as the Euro slipped down to the 1.11 handle before recovering slightly but still ended the night lower and unable to break through overhead ATR resistance at the 1.1140 level. The dominant trend remains down here:

The USDJPY pair was equally unmoved and remains poised at just below the 110 level, failing to make a new session high after finally breaking free of the previous daily/weekly high at the 109.60 level. This should make for a mixed session for domestic Japanese stocks but price really wants to inch up towards the 110 level:

The Australian dollar continues its stall at the  69 handle after briefly testing overhead ATR resistance at the start of the week. Momentum is barely positive and price remains below the downtrend from last week so even with the poor US CPI print, the technicals are not clear for any upside action just yet as hesitation around the direction of the RBA is still building:

Oil prices finally cooled off their downtrend, with the WTI contract settling a little higher above the $58 per barrel level. This could be just a pause or a bottom, but too early to tell as momentum is behind further price falls:

Finally to gold, which after suffering from some deflation on its recent bubble like performance, has fallen again overnight back to the $1547USD per ounce level but with some interesting intrasession buying support. The daily chart is slowly letting air out of the bubble, but watch ATR support at the $1540 level that must hold or a selloff could eventuate as 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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