Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

By Chris Becker 

You can beat protestors, but you can’t beat exuberant sentiment across risk markets overnight with European stocks surging to new highs while Wall Street finished with a flourish despite traders having to drive their Maseratis through broken glass to get to work. The Aussie dollar again outperformed against all the major currencies, while the USDJPY pair broke out of its funk, both bond yields and commodities also rose in unison. Only gold had a bad night while Bitcoin struggles to finally breach that $10,000 barrier and make it stick.

Looking at share markets in Asia from yesterday’s session where in mainland China, the Shanghai Composite finished 0.2% higher to 2921 points, while the Hang Seng Index rose over 1% to cross over 24000 points. This keeps price well back above previous firm support at the 23300 point level, with daily momentum now back to a positive value, the next target being long held resistance at the 24600 point level:

Japanese share markets were the standout again with the Nikkei 225 up another 1% to 22325 points, now in an extremely overbought condition, helped along by a weaker Yen. The daily price pattern is an obvious blowout as momentum is extremely overcooked but the USDJPY pair is playing catchup and likely adding fuel to the fire here so the chances of a reversion are slimming again:

The ASX200 had a modest session, gaining some 0.3% to 5835 points despite the Aussie dollar remaining just above the 68 handle for most of the session. SPI futures are up 30 points to build upon yesterday’s session with daily price action looking to beat the previous session highs and get towards the 5900 point level. The Q1 GDP release today could be another positive catalyst:

European markets have good from positive to boisterous with the German DAX outperforming as it returned from a long weekend, up a stonking 3.5% to a new post COVID 19 high at 12021 points. It’s now extremely overbought and over-extended but nothing seems in its way:

Wall Street dusted the broken glass and plywood off its feet and pushed the whole edifice to new monthly highs with the broader S&P500 finsihing 0.8% higher to 3088 points. This market is determined to head back to its previous level at the start of the year at 3400 points and it seems nothing will stand in its way, although momentum readings are a little cooler than other risk markets at this stage:

Onto currency markets where the Euro finished well above its Friday session highs at the 1.1170 level, after recently running out of puff and awaiting the return of German traders. I’m still watching for a potential swing below the low moving average at the 1.11 handle in the short term with intrasession activity pointing to an inversion:

The USDJPY pair finally broke out and how with a directionless start to the trading week turning into a definitive move higher overnight. Resistance overhead at the 108 handle was cast aside abruptly and took the pair to a new monthly high with the April 109.40 level the next target to reach:

The Australian dollar loves this trip to the moon despite an extremely overbought condition, almost breaching the 69 handle as part of a general risk on and anti-USD mood. Momentum is doubly overbought again with a potential rollover building, I’m watching the shorter term charts and today’s GDP print for a reversion back to the high moving average or the full band shortly, but never discount the possibility of more upside:

Oil prices maintained positive momentum as the OPEC+ meeting looms with Brent futures up through the $39USD per barrel level this time as it continues to reject the post-breakdown resistance level. This blowout up to the $40 level is not surprising, but is not being supported by anything but speculation so watch out for a violent inversion:

And, finally to gold which after a good start to the week was unable to hold onto those gains overnight, finishing lower at the $1727USD per ounce level. The inability to breach the former higs at the $1760 level is telling here so watch the low moving average and key support at the $1690 level that held throughout April:

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!

Comments

    • Im trying not to comment too much on the US situation. Rings hollow to say “I told you so” at this point. Just got to look on with pity and consternation basically and watch it burn.

      • it did not sound hollow to me when I said it to few people in the last few days. You know, I actually enjoyed it.