Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

By Chris Becker 

Action on markets on Friday night was centered around the US reaction to the Chinese boot on the neck on Hong Kong, with Trump unable to enact anything but hot air in response which calmed stocks on Wall Street somewhat even though the headline Dow fell slightly. The weekend race riots across the US have put a damper on risk going into the new month with Asian stocks expected to be slow this morning. The USD fell back against the majors with Euro hitting a two month high while the Australian dollar and gold look firm.

Looking at share markets in Asia from Friday’s session where in mainland China, the Shanghai Composite closed 0.2% higher to 2851 points, while the Hang Seng Index is off by 0.7% to 22961 points. A new daily low is ominous for the now non-independent city-state, keeping well below previous firm support at the 23300 point level, and ready to break below the long term trendline for a return to the March lows:

Japanese share markets were getting a bit anxious following their way too fast and too far rally, with the Nikkei 225 slipping only 0.2% to 21877 points. The daily price pattern has all the hallmarks of a blowout as momentum is extremely overcooked so watch the trade in Yen for signs of a probable reversion back to the high moving average closer to 21300 points or so to take some heat out of this:

The ASX200 was the biggest loser with shorts finally paying off as the market fell 1.6% to 5755 points. Really it was all about end of month dressing and a market having advanced too far, too fast to be sustainable. SPI futures are down over 20 points to start today’s session but it should be supported well enough at the 5700 level as business starts to return to normal as winter begins:

European markets couldn’t keep up the positive mood going into the northern summer with pullbacks across the continent and in Brexitland, where the FTSE fell over 2% while the German DAX finished 1.6% lower to 11586 points. Momentum had been moving into extremely overbought levels so this is not surprising, but given the overall price pattern is likely to be only a short term inversion before another legup:

Wall Street was split a little as the headline Dow fell back with a scratch session, the NASDAQ lifting well over 1% higher while the broader S&P500 took a middle road to finish 0.5% higher to remain well above the 3000 point level. Its not looking good here for short positions – remember the economy has nothing to do with Wall Street – its being juiced, fed, pampered and looked after by the Fed:

Onto currency markets where the Euro continued its mid week surge to this time breach the 1.11 handle for a new monthly high. A very solid move as USD is dumped but watch for a potential swing below the low moving average at the 1.1080 level in the short term:

The USDJPY pair fell sharply at the end of the Asian session, touching a two week low but then had a solid surge back to where it started the week on risk taking correlation.Another hard market to discern direction, but obvious resistance at the 108 handle is obvious:

The Australian dollar finished the week and month in a relatively stable and solid position at the mid 66’s on Friday night and looks set to open this morning possibly a little low given the events of the weekend. Four hourly support at 65.90 and daily support at 65 proper should hold here, but there is a potential for more sideways action as resistance at 66.50 firms:

Oil prices maintained positive momentum despite falls in stocks with Brent futures up through the $37USD per barrel level again as it rejects the post-breakdown resistance level. I’ve been saying for awhile here that I wouldn’t be surprised at another blowout that could even hit the $40 level before all the longs are exhausted in this move, but watch out for a violent inversion:

And, finally to gold, which after deflating all week finally found some buyers on Friday night with a relatively small move higher to finish at the $1737USD per ounce level. The short term inversion below $1700 due to the lack of further buying support appears over and ready to return to the previous highs as very firm support below shows, the shiny metal remains in a solid position:

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!