Macro Morning

By Chris Becker 

The latest US Federal Reserve meeting last night didn’t provide the punchbowl that risk markets were expecting, even though interest rates are going to at zero for years to come. Wall Street stumbled while Treasury bond yields lifted slightly and the USD firmed against most of the major currency pairs. The latest US retail sales figures didn’t help, underperforming, while the latest hurricanes in the Gulf of Mexico and their impact on oil production saw oil futures zoom more than 4% higher.

Looking at share markets in Asia from yesterday’s session where the Shanghai Composite gave back the previous advance to be down nearly 0.4% to 3283 points while in Hong Kong the Hang Seng Index was almost doing the same before managing a scratch session to finish at 24725 points. The August lows at 24000 points remains firm as strong daily support but daily momentum is still trying to swing back from the oversold condition and back towards the 25000 point area:

Japanese stock markets are holding on despite a much stronger Yen with the Nikkei 225 barely unchanged at 23475 points. Price still wants to test resistance at the previous weekly highs as daily momentum remains positive, although the much stronger Yen remains a headwind:

The ASX200 was the odd one out yesterday, soaring 1% to close at 5956 points, really wanting to break the 6000 point barrier again. SPI futures are down over 10 points on the Wall Street wobble and yesterday’s price action did not break the previous daily highs or the high moving average on the daily chart, so we’re likely to see another stall here today – but jobs numbers could be a catalyst:

European markets again showed a little life overnight with the FTSE pulling back from its big surge and stood out as the only loser, while the German DAX lifted about 0.3% to 13255 points but was unable to gain any real traction. The daily chart shows firm support at the 12900 point level as this uptrend channel remains intact, but resistance continues to build here at the recent daily/weekly highs nearer the 13300 point level:

Wall Street couldn’t put on another positive session following the FOMC meeting and retail sales print with the S&P500 taking back the previous gains, down 0.5% to 3385 points. The four hourly chart is showing how strong overhead resistance is at last week’s failed breakout position nearer the 3420 point level as momentum rollsover here:

The NASDAQ has an almost identical chart pattern and could fall back to last week’s intrasession low below 11000 points:

Currency markets were mixed again following the FOMC meeting with Euro effectively moving lower by again rejecting overhead resistance at the 1.19 level, almost toying with breaking the 1.18 handle instead. Momentum has switched from somewhat overbought to a negative funk, heading back below the Monday starting position, so watch a potential move towards last weeks lows:

Yen buying is the order of the day as the USDJPY pair continued its breakdown overnight, falling straight through the August lows (solid black horizontal line) and breaching the 105 handle. While still oversold and in a pause mode the last session or two, it could go even lower as the weekly downtrend heads towards the pre-COVID lows:

The Australian dollar was relatively calm despite the noise of the Fed with a potential breakout above the 73.40 level thwarted again with only a mild pullback to be at the 73 level this morning. This still keeps it above last week’s price action so watch the low moving average at the 72.80 level to firm as support:

Oil futures surged overnight due to the Gulf of Mexico problems, with Brent futures up more than 4% to be above the $42USD level for a new two week high. The significant break above trailing ATR resistance has turned the swing play off the support bottom at $39 into a new uptrend:

Gold continues to move in fashion with other undollar assets with an unexpected pause despite the Fed’s retience about inflation overnight, basically unchanged and still hovering near last week’s high at the $1960USD per ounce level. This could turn into a swift selloff if support doesn’t hold at the $1950 level:

Silver was looking a better position here with the daily chart still above the $27USD per ounce level, but momentum is lagging and no new daily high is starting to bite on confidence.  Significant resistance at the $28.30 level remains the level to beat, even though the overall the medium term picture is looking more promising:

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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