Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

By Chris Becker 

Wall Street stumbled on the stalemate on fiscal stimulus measures from Congress, although the NASDAQ kept going higher, with the most interesting moves on bond markets as the US initial jobless claims improved better than expected. The USD oscillated around the economic reports, finding more strength later in the session but gold and silver also bounced back.

Looking at share markets in Asia from yesterday first where in mainland China,  the Shanghai Composite had a minor positive return, as it oscillated around the 3320 point level while in Hong Kong the Hang Seng Index also put in a scratch session to finish at 25230 points. Futures are suggesting a further pull back to finish the week in a sound, but still hesistant position as daily momentum remains in the positive zone:

Japanese stock markets were the best in the region with the Nikkei 225 closing 1.7% higher at 23249 points in a very solid move higher that matching the July highs. Futures are indicating a flat start this morning as Wall Street stumbled with momentum looking extremely over stretched here:

The ASX200 was the worst off, not liking the latest job figures at all nor the recent earnings results with a fall of 0.6% to 6091 points. SPI futures are suggesting a further pullback as we go into the final trading session of the week. It looks like resistance at the May highs is firming here, watch for a swing short play lower:

European markets gave the first stumbles in the risk complex overnight, with the German DAX slipping 0.5% to 12993 points before moving lower again in post close futures. The daily chart was looking firm here with solid momentum but as I reminded yesterday, still requires a clearance of the May highs and the June false high well above the 13000 point level:

Wall Street is not letting anything step in the way of new record highs, but even buying exhaustion happens from time to time, save for the NASDAQ, with the S&P500 closing 0.2% lower at 3373 points. The daily chart of S&P futures shows price almost back to the pre-pandemic highs with daily momentum still on track and price hanging on to the high moving average line – all indicators that this advance is not yet stopping:

Currency markets continued to waver on the strong USD meme with Euro this time able to break out of its funk, breaching the 1.18 handle and holding there post the initial jobless claims later in the session. This makes a new high intraweek, but still keeps the union currency below the previous weekly highs closing to the 1.19 level which is a bearish sign for now:

The USDJPY pair continues to hold above its previous breakout high but again just missed out on breaching the 107 handle proper. The extreme overbought status is starting to revert and rollover here, so continue to watch for potential support at the mid-July anchor point (upper horizontal black line):

The Australian dollar remains the weakest against USD, this time rebuffing attempts to break the 71.70 level and rolling over post the US jobless claims print to the mid 71s where it faces a tough task in the final trading session of the week. Momentum remains negative on the four hourly chart and we could see a reversion to the recent lows at the 71 handle proper:

Oil futures still can’t gain traction with the Brent marker slipping back to be just on the $45USD per barrel level, with WTI futures also sanguine in their overnight performance. The four hourly chart of Brent shows a market unable to capitalise on its previous weekly breakout above the $44.30 level with considerable resistance overhead:

Gold and silver both remain volatile but that volatility is settling down somewhat post the big correction mid week. Gold prices came back a little overnight to breach four hourly resistance at the $1950 level where its holding this morning but still with negative momentum readings. I said previously that its possible this correction could spill over and continue down to the previous breakout and record high at the $1825 level, which would give price some better medium term longevity, but again watch silver – which had a better night – as the precursor here:

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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Comments

  1. I’m thinking we are in for a correction like in June. Worth a BBUS punt?
    Copper down solidly overnight – down 3% ish and breaking bottom trend.
    10yr us bond yield just gaped up 4%ish – check out last time this happened in june.
    Oil looks like it has settled at 35% down from precovid crash highs giving a realistic sign of where economies are actually treading.
    Doji star on the S&P on the double top.

  2. Goldstandard1MEMBER

    There is something sooooooo stinky about a company like Lendlease taking millions from jobkeeper then handing out higher dividends. Like at least pretend to care what it looks like and not crap all over everyone. I think it will bite back soon as it’s a real bad look.

    • He probably came across someone that attended the BLM protest. Probably while grabbing lunch or something.