Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

By Chris Becker 

Last night saw another surge on Wall Street on hopium with traders jumping on the rumors and swirling around coronavirus vaccine news, although European stocks were less impressed. The USD fell back against some of the majors while the bond market was basically unchanged, as the economic calendar was very light on overnight. Commodities saw a mixed session with oil still falling, copper and iron ore prices up while gold lifted nearly 1% as Bitcoin also came back to life.

Looking at share markets in Asia from yesterday’s session where the Shanghai Composite was up nearly 1% but fell back to close 0.5% higher at 3278 points while in Hong Kong the Hang Seng Index bounced back, up 0.6% to 24640 points. The August lows at 24000 points are just holding on as daily momentum looks set to swing back from the oversold condition and back towards the 25000 point area but this support level must hold:

Japanese stock markets were the best performers again with the Nikkei 225 rising nearly 0.7% to 23556 points . There’s likely to be another retest of resistance and previous weekly highs as daily momentum picks up and with little impediment from a lower Yen. Watch for another new daily session close above the high moving average:

The ASX200 closed nearly 0.7% higher at one point shy of 5900 points, led by commodity stocks as BHP and Fortescue both put on around 2%. SPI futures are up around 20 points or so, but the market is likely to push even higher in step with a resurgent Wall Street. As I noted yesterday, while trailing ATR support at the mid 5800 point level has been broken twice now here, strong buying support is evident at the 5800 point level as the oversold condition is likely to swingback to the mean:

European markets were very staid with scratch sessions the order of the day, the German DAX actually falling back about 0.1% to 13193 points and retreating even a little further on futures. The daily chart still shows support at the 12900 point level as this uptrend channel remains intact with daily momentum positive, but resistance is definitely building here at the recent daily/weekly highs nearer the 13300 point level:

Wall Street loves a comeback story, with any excuse to buy low again as the NASDAQ bounced nearly 2% while the S&P500 was able to lift 1.3% to 3383 points. The daily chart still shows a potential rout if the 3300 point support level as futures clawed back some of these gains overnight, with daily momentum still negative, the BTFD crowd has not yet won:

Currency markets were largely moving towards a weaker USD with a few exceptions as Pound Sterling tried in vain to bounceback from its previous week selloff and Euro also trying a similar push higher, but unable to get back above the 1.19 handle or last week’s intrasession high just below that level. Momentum remains nicely overbought though so we could see another attempt tonight:

The USDJPY pair finally moved somewhere – this time down – as the weaker USD meme pushed the Yen higher, making a near two week low in the process. Now considerably oversold we could see some calm in the Asian session, but watch for a potential move lower to the previous weekly low at the 105.20 level:

The Australian dollar was relatively unchanged overnight despite the weaker USD with it still hovering at just below the 73 level. There is still a potential bottoming pattern forming here so watch for this level to come under pressure this week, although I note there’s been several fake breakouts above that level already:

Oil futures remain in bearish mode, with Brent futures slipping again to remain well below the $40USD level as volatility tightens up around this level making a monthly low. There are almost no buyers here so I can see a potential selloff further below here even though momentum is extremely oversold:

Gold mimicked Euro in its subdued move higher overnight, a solid breakout but unable to match last week’s high at the $1962USD per ounce level, closing at $1956 instead. This remains a swing play from the oversold nature of the previous selloff but defence of the $1940USD per ounce level has been staunch so this suggests there’s more potential upside – watch that weekly downtrend line to come under pressure:

Silver is looking in a better position here with the daily chart showing a tick above the $27USD per ounce level, as it continues to bounce nicely off weekly support. There is still significant resistance to overcome at the $28.30 level, but overall the medium term picture is looking more promising, but watch that trendline carefully:

 

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

Leave a reply

You must be logged in to post a comment. Log in now