Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

By Chris Becker 

The plunge protection team stepped up to the plate again last night on Wall Street as a stunningly bad weekly jobless claim print and another record high number of new COVID-19 cases in the US  wasn’t real enough for shares to selloff. Commodities rallied with oil up over 2% while the USD was relatively stable as we go into the end of the week.

Looking at share markets in Asia from yesterday where Chinese markets were closed with the Shanghai Composite having a long weekend while the Hang Seng Index will reopen today. An ominous bearish double top pattern may be cast aside given the fill on Wall Street overnight, daily short term support at 24200 must hold:

Japanese share markets had another session of low volatility, the Nikkei 225 finishing 1.2% lower to 22259 points making a new weekly low. Futures are indicating a fill on most of those losses today as daily ATR support at the 21500 point level remains firm as this sideways trend remains intact – just:

The ASX200 was the worst in the region, helped along by fears that the QANTAS announcement is putting some reality behind the recession, falling by 2.5% to 5817 points. SPI futures are up over 70 points or more than 1% going into this morning’s open so it looks like both ATR daily support and the recent lows at the 5750 level will hold here as we go into the weekend at the usual month/quarter/year window dressing:

European markets had a modest bounce as focus was pulled away from the continent for the time being, with the German DAX lifting 0.7% to 12177 points. Momentum was pointing to an inversion that might see a sharp retracement below 12000 points but this fill and the lack of a close below the low moving average supports the bulls for one more session:

Wall Street loves bad news with all three major bourses up 1% or more, the S&P500 eventually closing 1.1% higher to 3083 points. The four hourly chart shows this bounceback came very late in the session after almost threatening to break the previous lows below 3000 points proper. This likely means another return to the top of this rectangle patter up at 3140 or so:

Onto currency markets where Euro remained on course and fell back further to just above the 1.12 handle, confirming a break below previous resistance at the 1.1270 level and now on its way to the former weekly lows. Momentum is not yet oversold yet but the recent bunch of price around the 1.12 level does suggest more support in the short term:

The USDJPY pair tried to push higher above the 107 handle but failed to gain traction, pulled back to its starting point from 24 hours ago.  I’m still watching for a move back towards the previous weekly highs at the 107.50 level, but the overbought condition could see a fallback to the low moving average and the 107 handle proper:

The Australian dollar was relatively quiet overnight, sticking below the 69 handle and remaining out of favour after getting ahead of itself earlier in the week. As I said previously, the failure to get above last week’s high at the 69.60 level was telling and we should see a return to the previous weekly lows around the 68 handle:

Oil prices came back slightly following the big drop prevously with Brent futures lifting just over 2% to be back above the $41USD per barrel level. This move shows more buying support than expected, filling in the session lows, and it must indeed hold here in the coming days or it risks falling another 10% to previous resistance at the $35 level:

Gold recovered somewhat as well, getting back to the $1763USD per ounce level overnight after the inevitable pullback from its big breakout at the start of the week. Price is still above the previous nominal highs and sets up for further upside, as momentum pulls back from its significantly overbought mood here with signs of re-engagement if price hovers above $1750 or so:

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!