Macro Morning

See the latest Australian dollar analysis here:

Macro Morning

By Chris Becker 

The short week for US markets meant the early release of the June non farm payrolls (US unemployment) numbers overnight, which surprised to the upside, but didn’t give a huge boost to Wall Street as expected, although the bubblicious NASDAQ made another new record high. The USD came back slightly against the undollars, while gold remained relatively steady as other commodities rallied as the risk on mood was more European in nature, with Brent crude also lifting nearly 2% to a weekly high.

Looking at share markets in Asia from yesterday where the Shanghai Composite is surging higher again, closing 2% higher to 3090 points while in occupied Hong Kong the Hang Seng Index has returned with a similar move higher, up nearly 3% to 25124 points, slightly exceeding the former weekly highs throughout June and May. The daily chart suggests all systems are go for another breakout above those highs as momentum finally gets into overbought mode and support rises:

Japanese stocks were the relative losers in the region, the Nikkei 225 lifting only 0.1% to 22145 points. Futures are indicating a slightly better start this morning but the daily price chart still looks 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 surged well above the 6000 point barrier, lifting over 1.6% to finish at 6033 points in a broad move higher. SPI futures are up over 30 points or half a percent, so we should close out the week somewhere near the former highs in this ridiculous relief rally as the shorts fall by the wayside:

European markets soared through a series of big breakouts, with the German DAX closing nearly 3% higher to 12608 points. Momentum has finally picked up here and this clear breakout abvoe the recent session highs should presage another attempt at the relief rally high just below 13000 points:

The mood on Wall Street going into the long weekend following the NFP print was positive, but relatively lower than European bourses, with the S&P500 eventually closing only 0.5% higher to 3130 points. The four hourly chart shows resistance at the 3140 point level was nominally cleared but then fell back later in the session but the trend remains quite intact here for now:

Onto currency markets where again, intrasession volatility was helpful for the short term traders with Euro having another nearly 100 pip range in the wake of more economic prints. This time it moved through overhead ATR resistance before getting flummoxed down towards the 1.12 handle on the NFP print, stabilising just below the mid 1.12 level this morning.   The former weekly lows were my target this week but short positions are not building as expected, even following the usual US unemployment print catalyst:

The USDJPY pair was also a wash with a small move up towards the high moving average on the four hourly chart, which has a tight range between the low and high sessions, before resuming its sideways trend to be at the mid 107s this morning. Resistance at the 108 level is still well in play here, but trailing ATR support remains intact and no new session lows are indicative of some support:

The Australian dollar tried to keep on climbing with a wide ranging session that amounted to nothing with a stalling finish here 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 previous weekly highs but I’m watching momentum levels closely:

Oil prices found some volatility overnight in the wake of the US jobs report with Brent futures up nearly 2% to be just below the $43USD per barrel level, almost matching the previous price highs from this rebound rally. Daily momentum is still 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 tight session here to finish at the $1775USD per ounce level.  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!

Latest posts by Chris Becker (see all)

Comments