Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

By Chris Becker 

Risk markets continue to be rattled by fear over the coronavirus with the big jump in Chinese cases sending Wall Street send slightly overnight which should provide a minor headwind to end the risk taking here in Asia going into the weekend. Euro continued its post Brexit plunge with a near three year low despite a slighter weaker than expected US CPI print while commodities were mixed as gold and Bitcoin remain elevated.

Looking at Asian share markets performance yesterday where the Shanghai Composite was down the most, off by 0.7% to close just above the 2900 point barrier at 2910. Meanwhile the Hang Seng Index tripped a little, down 0.3% or so to 27730 points. Price had recently broken out above the high moving average on the daily chart but the 28000 point level is where firm resistance lies, as momentum is still not yet positive:

Japanese share markets had modest falls with the Nikkei 225 losing 0.15% to 23827 points, as safe haven buying in Yen hindered the recent uptrend. Price continues to reject resistance overhead at the 24000 points with daily momentum rolling over again as futures indicate another retracement back to the start of week level:

The ASX200 was the odd one out, actually gaining a handful of points, up 0.2% to 7103, breaking the 7100 level for the first time.  SPI futures are dead flat given the slightly unchanged action on Wall Street with price still well supported, but the daily chart is giving off bearish double top patterns:

European markets were unsteady throughout the session with the FTSE falling 1% while the rest of Europe had slight scratch session. The German DAX closed flat at 13745 points, with a wide ranging session that kept price above the high moving average and momentum still high after the recent breakout:

Wall Street suffered a similar fate with lots of traders looking at each other and not knowing what to do, with only the headline and narrow Dow falling substantially – off by 0.4% but the NASDAQ and  S&P500 barely moved lower. The four hourly SP futures chart shows how price is still poised here for yet another breakout because nobody wants to selloff this market:

The USD strength is really showing against Euro as Pound Sterling unhinges in correlation, lifting sharply overnight in what has been a volatile week. Euro however is just falling down the steps like a drunk sailor, moving right through the 1.09 handle and now into the low 1.08’s after recently making a new monthly low. The terminus for this move is very hard to discern but in the medium term it could get to the 2016/17 lows at the 1.04 level:

The USDJPY pair is still wavering here as the risk proxy of choice, and after a small inversion back below the 110 handle looks set to be unmoved by the end of the week with some support coming in overnight at the 109.70 level. Resistance at the 110.20 high reached in January is still a bridge too far, so I’m watching for a further inversion as momentum tapers:

The Australian dollar is again hitting resistance and folding with a move back down to the 67 handle overnight with a series of lower lows on the four hourly chart quite evident. Without any accommodative support and still depressed commodity prices, the Pacific Peso’s future remains down, with a short term flop through the current weak support at the 67.10 level the area to watch:

Oil prices are finally finding some stability again with Brent lifting well off its lows and WTI following somewhat, the latter finishing back above the $51USD per barrel level. The daily chart shows how price action is hovering around key monthly support, and needs a significant breakout above the high moving average to really get moving again:

Finally to gold, which is still holding on, being stuck in a sideways trend for over a month now and advancing a little on the safe haven bid overnight to finish at the $1576USD per ounce level. This still keeps it well above ATR trailing support at the $1550USD per ounce level and combined with positive daily momentum keeps away the bears:

 

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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