Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

By Chris Becker 

Wall Street continued to rise overnight, with the NASDAQ to an all time high while the release of the FOMC minutes had little impact, with markets focusing more positively on latest ISM manufacturing print. The USD fell slightly with bond yields rising while gold slumped after almost lifting through the $1800USD per ounce level.

Looking at share markets in Asia from yesterday where the  the Shanghai Composite surged higher to finally get back above 3000 points, up 1.4% to 3025 points while in occupied Hong Kong the Hang Seng Index was closed due to what is not really going to be a holiday anymore given the tight grip the CCP has on the wayward province. The daily chart suggests a possible retracement below the low moving average at the 23500 point level to watch on the re-open:

Japanese stocks are getting a little more volatile with mild selloffs on the Nikkei 225, down nearly 0.8% to 22121 points. Futures are indicating a flat start this morning with the daily price chart still looking weak here with a series of lower daily highs and very low volatility, suggesting a sharp move either way is due soon. Watch daily ATR support at the 21500 point level and the high moving average for those signs:

The ASX200 has started the financial year with a mild up session, lifting 0.6% to be back above 5900 points. SPI futures are up over 40 points so we could see a breakout and a rush towards the 6000 point level, as momentum picks up and prices get back above the high moving average:

European markets had scratch to minor down sessions across the board with a co-ordinated sour response to the latest employment and retail sales prints, with the German DAX closing 0.4% lower to 12260 points. Momentum remains relatively flat here with price still poised above daily support but trying to get back to the recent session highs. I’m still watching for a sharp retracement below 12000 points or a breakout above the 12500 local resistance level:

The NASDAQ lead the way again, while the narrow Dow fell back slightly, the S&P500 closed 0.5% higher right on 3115 points. The four hourly chart shows the continued breakout from last week’s small downtrend, clearing resistance at the 3100 point level with very solid momentum. This move will likely try to get back to the weekly highs that should be very strong resistance at the 3140 point level:

Onto currency markets where again, intrasession volatility was not helpful although Pound Sterling had a good breakout, Euro had another nearly 100 pip range in the wake of the economic prints. This time it moved below the 1.12 handle before trying to return to its Monday night high and settled back at the 1.1250 mid level. The former weekly lows still remain my target here this week so watch the low moving average for signs of another test:

The USDJPY pair has now retraced its Monday night breakout, deflating into the low 107s overnight as Yen safe haven buying picked up a little. I mentioned yesterday that resistance at the 108 level could force a rollover and here we are, but trailing ATR support remains intact and no new session lows are indicative of some support:

The Australian dollar kept on climbing with a small intrasession move higher during the City open but retraced back to a slightly higher position just above the 69 handle where it remains this morning. This is a nascent rally only and has yet does not have legs to tackle the precious weekly highs but I’m watching momentum levels closely for a re-engagement particularly on today’s trade balance figures:

Oil prices were relatively quiet overnight agin with Brent futures nearly unchanged to be just above the $42USD per barrel level, still getting buying support after its recent modest bounce off the recent daily lows. Daily momentum is still flat, but positive for now, with a breakout above the high moving average at $43 or so required before another legup in this ridiculous rally:

Gold was unable to put on a new daily high, having a very volatile session with a blip down to the $1760 level before finishing the day slightly lower at the $1770USD per ounce level. This could be a sign that not all is well, but would require a break below the low moving average at $1750 or so with daily ATR support still lifting and providing a good uncle point to keep the longs engaged.  Momentum remains in a solid overbought mood here, although watch for an inversion below the 100 level which is the usual sign for a swing short 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!

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