Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

By Chris Becker 

Risk sentiment continues to fade with a mess Wall Street session overnight, as money pressured bonds instead as US Treasury yields fell further. Commodities were equally mixed, with oil futures lifting while iron ore and gold stumbled, while the latest BOE meeting saw their QE program expanded, sending Pound Sterling to a new weekly low.

Looking at share markets in Asia from yesterday’s session where the Shanghai Composite closed up a handful of points to 2939 points while the Hang Seng Index was off by nearly half a percent before closing square with a scratch session at 24464 points. Yet another daily session not indicating any direction for price as this sideways move on the chart remains poised to go nowhere:

Japanese share markets continued to fall with the Nikkei 225 off by another 0.4% to 22355 points. Daily ATR support at the 21500 point level remains firm and longs need to watch the high moving average for signs of a breakout and return to the previous highs as momentum remains positive but slowly down here as last week’s breakdown still lingers:

The ASX200 fell the hardest, helped along by the poor unemployment print, down 0.9% to 5936 points, taking back the previous gains and unable again to get past the 6000 point barrier. SPI futures are down only 5 points, so the waited breakout above 6000 points is still not ready as correlated risk continues to take a breather. Again like those other markets take heed of daily ATR support just below the recent daily lows as the uncle point for a rollover:

European markets had a modest selloff across the board overnight with the German DAX falling the most, down 0.8% to 12282 points, but it came back a bit post-close in futures. Solid support at the recent lows is still holding here but there’s definite overhead resistance at the recent daily highs, just like all other equity markets:

Wall Street had another staid session, with the NASDAQ the only one to advance again, while the S&P500 put in a mild scratch session to finish at 3115 points as the Plunge Protection Team stepped in again. Price remains just below short term ATR resistance with momentum stuck on the four hourly and daily charts. No definitive signs of a rollover yet, but this is building to something:

Onto currency markets where the action truly lay, as Pound Sterling flummoxed to a two week low with a 100 pip drop following the BOE meeting, dragging the Euro down with it. The union currency fell back to the 1.12 handle proper, matching its own two week low and now getting a little oversold with a tiny bounceback in the morning. Watch the 1.12 level closely for another rollover going into the weekend:

The USDJPY pair however remained depressed and didn’t move much below short term resistance at the 107.60 level, still below its Monday morning starting price.  The inversion trade may start again soon if no new session highs are made shortly, as the anticipated rollover of momentum builds up steam, with the 106.50 former lows the target here:

The Australian dollar also retreated slightly following the reaction to yesterday’s job figures, heading down to the mid 68’s overnight.  In the short term, the bears have the Pacific Peso in their sights, so watch for continued price action to hug the low moving average with a possible return to last week’s lows at 68 cents:

Oil prices got out of their funk overnight with Brent and WTI futures both up 2% or more, the former pushing through the $41USD per barrel level for the first time in almost two weeks. Price is ready to go back to overbought readings on the daily momentum chart so we could see a retest of the previous breakout highs above $42 shortly:

And, finally to gold which finished the night just below the $1730USD per ounce level once gain in yet another tight session.   Any medium term long position requires a confirmation of a push through the $1750 level for a proper breakout to a new monthly/yearly high, so watch momentum readings here – low volatility always begets high volatility:

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!