Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

Risk is rebounding again in fits and spurts as volatility spikes before the US election with the USD losing ground against everything but Euro while Wall Street advanced – except tech stocks. More positive economic data with the latest ISM Manufacturing PMI print coming in hotter than expected, repeated in the EU and UK as well. Oil prices rebounded alongside gold while Treasury yields pulled back.

Looking back at share markets in Asia from yesterday’s session where the Shanghai Composite is again stuck with a scratch session, up only 0.1% to 3225 points while in Hong Kong the Hang Seng Index surged 1.5% to 24460.  The daily futures chart was poised to break lower still as daily momentum flips to negative, but this has been thwarted with no new session lows, so watch for the high moving average to be broken soon on an upside breakout:

Japanese stock markets were boisterous too, with the Nikkei 225 closing nearly 1.4% higher to 23295 points. Price is firming at the daily ATR support at the 23000 point level and it must hold here to begin the long climb back above the broken trendline, with very strong resistance at the 23700 point level the target ahead:

The ASX200 also moved forward, up 0.4% to 5951 points as traders factor in the triple whammy of the US election, Melbourne Cup and the RBA meeting in today’s session. The daily chart is quite poised here to expect some volatility with the upper and lower black resistance and support lines that I showed on the weekly chart yesterday revealing the real entry and exit points:

European markets had a very positive session on short covering in the wake of the final PMI prints and some hopium that maybe Biden can win against the anti-European Trump with the German DAX closing 2% higher to 11778 points. The daily chart is trying in vain to put in a bottom here with recent daily lows stuck at the 11500 point level – but momentum remains considerably oversold and not ready to swing back higher just yet:

Pundits are reckoning that Wall Street is broadcasting a Biden win, but the technical charts say otherwise despite the S&P500 closing 1% higher to 3302 points overnight. The four hourly chart still shows a series of downtrends and failed breakouts at trailing ATR resistance at the 3350 point level remains the target to beat this week:

The NASDAQ is showing the true picture, closing only 0.15% higher at 10928 and unable to get back above the 11000 point level proper. This looks like an exhausted market and one that is broadcasting further falls. Watch for any close below 10900 points in the week ahead:

Bitcoin’s breakout is inching ever so higher to match the previous price high (upper horizontal black line) as it continues well above the $13000 point level. Can it breach it for further upside this week is the question – watch the low moving average as intermediate support here:

Currency markets are mixed with Euro remaining in the doldrums despite the good PMI prints, continuing to sell off below the 1.17 handle as it reaches another new monthly low. The four hourly chart does show a potential deceleration here as it approaches the mid September lows but there is potential for further lows in the wake of volatility and further shutdowns across the continent, let alone the US election worries:

The USDJPY pair continues to firm here prior to the election with price heading above trailing ATR resistance on the four hourly chart, almost getting to a new weekly high in the process. Momentum is nicely poised here but not yet overbought so watch for further upside in today’s session, but be mindful that the medium term trend remains down and Yen safe haven buying could accelerate on any Trumpian shenanigans:

The Australian dollar was under enormous pressure to start the week but has recoiled because of that pent up volatility as commodities came back overnight, dragging the Pacific Peso back up to the mid 70’s. After recently crossing below the September lows and weekly support slightly below the 70 handle, there is potential for a rout to be avoided. Today’s RBA meeting may be crucial in terms of setting the medium term direction. Short term I’m looking at the 70.70 level on the upside:

Oil volatility came back again but this time to the upside with Brent surging back above the $39USD per barrel to start the new trading month with more hope after a breaking below the September lows. The daily chart is still showing former support, now key resistance at the $40 level the area that must be broken to get back on track here or this might be the last hurrah before rolling over as Europe goes into lockdown and the US drives down the highway to hell:

Gold really wants to re-inflate here, starting the week unexpectedly with a big surge, almost hitting the $1900USD per ounce level overnight in a nice swing trade. The four hourly chart shows the bounce off the September lows at the $1845USD per ounce level but as I said yesterday, it would take a big reversal in USD fortune to see it touch the $1900’s again soon:

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)

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. Stewie GriffinMEMBER

    So the RBA announced a Proof of concept project today using CBDC in tokenised form using the ETH technology:

    The project will involve the development of a proof-of-concept (POC) for the issuance of a tokenised form of CBDC that can be used by wholesale market participants for the funding, settlement and repayment of a tokenised syndicated loan on an Ethereum-based DLT platform.

    https://coingeek.com/reserve-bank-of-australia-announces-cbdc-plans/

    They are partnering with Commonwealth Bank, the National Australia Bank, Perpetual, and ConsenSys. The actual RBA release:

    https://www.rba.gov.au/media-releases/2020/mr-20-27.html

    ConsenSys is the company that I mentioned in the weekend post that purchased JP Morgan’s first private blockchain which use’s ETH code:

    “Quorum was a real attempt at making Ethereum technology stick in an industrial setting. But it’s being re-homed and I really don’t think there’s going to be a lot of progress down the line from ConsenSys. From my point of view, I think they’re mostly buying the brand and being able to just use the Quorum trademark and intellectual assets from that point of view for marketing.”

    https://www.macrobusiness.com.au/2020/10/sunday-supplement-1-november-2020/#comment-4019049

    This trial will fail for exactly the same reason why JP Morgan disposed of it’s private blockchain asset to CoinsenSys in the first place – because ETH cannot scale:

    “ETH technology just doesn’t scale – it is based around an account based settlement system as a opposed to a transaction based settlement. Simply put, this is the difference between ensuring every account you COULD transact with is valid versus the SINGLE transaction you are about to spend is valid (it is a little more complicated than this, but it will do).”

    However the item of note is that the CBDC that is being trialed ISN’T an Oracle ledger form of the currency, rather it will be a tokenised CBDC, which is how I’ve been describing the form that CBDC will take. Blockchains are still the ONLY solution to the double spend issue of ‘internet money’ i.e. tokenised form, as opposed to digital online spending via accounts.

      • Stewie GriffinMEMBER

        I hadn’t come across ISO 20022 before, but agree that it will drive change – interesting that what the scope document describes suggests the standard will have to have both scalability, security and able to carry data.

        A bigger immediate influence on this space at the moment is US Justice Departments stated desire to treat crypto as currencies. This means Crypto will be subject to ‘The Travel Rule’ and will substantially reduce the reportable notional in AML terms of payments too and from licenced crypto exchanges.

        https://www.justice.gov/ag/page/file/1326061/download

        There is also the potential that if you come into possession of crypto that for whatever reason has been previously tainted, then it won’t be allowed to be traded on licenced exchanges, which will remain the main portal back to fiat.

    • I’m looking at these. Picked Vow and Declare and 4 other winners last year. Get in on Ladbrokes’ no risk race 1 bet. Could set you up for the day.

      Persan
      The Chosen One
      Finche
      Verry Ellegant
      Vow and Declare
      Master of reality

      Haven’t looked at odds yet

      Disc: not a close track watcher, just keep an eye out from spring. Rank amateur.

      • I used to pick horses based on names that jived with topical events — and had a great run of success. Then it all came to a crashing end and I tried to read the form instead. That was blo0dy hopeless too so am going back to the old method this year.

      • Good call MHT

        My 3, which will change before the race no doubt – Master of Reality, Finche, Sir Dragonet

        • Mike Herman TroutMEMBER

          Swampy, I like your numbers. Think I might thrown yours and mine in a first four…

      • Thanks Mike. It’s still early in the morning but, so far, I’m on Twilight Payment for the win and Steel Prince for a place. I’ll circle back a bit later and have another look, no doubt!

    • Totes BeWokeMEMBER

      All the virtue signallers at channel 9 this morning tipped a female jockey winning.

      I haven’t even looked but at even money, I’d put $50k on a female jockey NOT winning.

      • Totes BeWokeMEMBER

        Not sixest. They just don’t have the strength to weight ratio, and in a race that is so scrutinised by the handicapper, except for the jockey, it’s a freak event if it happens in a race like this.

        Those blokes are so fit and strong and give it all to drag that 500kg horse over the line.

        My dad was an extremely successful punter, and he wouldn’t touch the cup. 2 miles, unknown international horses, different directions, extremely carefully handicapped. In theory, they should all cross the line together. 24 way dead heat.

      • Mike Herman TroutMEMBER

        Jamie Kah riding very well TBW, and on an excellent winning chance too. Someone might take you up on that bet…

        • Totes BeWokeMEMBER

          In that case, I’d still take the bet, and lay it off by backing that Prince of Arran at 11/1…. $5k.

          I guess that still leaves me exposed to other female jockeys (so to speak), but I’d take that risk i reckon.

      • The ‘wokeness’ is a blowback from Linda Meech being taken off from Though of That last year because she’s female.

        https://www.google.com/amp/s/amp.abc.net.au/article/11652746

        It was a stupid decision from the owner to take a winning jockey off the horse that won a string of races. The horse with the new jockey didn’t win, and Meech decided she have enough and went to have a baby instead.

        • Totes BeWokeMEMBER

          If I owned a horse in the cup, there’s no way I’d have a female jockey on it. Just not realistic. Massive handicap, that’s not handicapped (I’m sure you know what I’m saying)

          Time I backed myself. Off to lay that Prince of Arran.

      • FUDINTHENUDMEMBER

        Partly because that is a fantastic black Sabbath album. Partly as it seems to be a reasonable horse who can run the distance (came close last year, won its last 2800m race), and the jockey is in form. But mostly because black Sabbath.

        • That’s the way I punt, FUD. Besides, the Cup is just too much of a lottery to take it too seriously.

    • Cup aside the whole gambling thing is another example of what has become of this country – fked. Watching my nephew who’s a tradie in his 20s and all his mates – everyone that age just gambles on their phones and talks of gambling. Many high school kids know what odds are too – no one knew what odds were when I was a kid – you might have traded footy cards but that was about it.
      Grumpy old man rant over – thank you for listening.

      • Totes BeWokeMEMBER

        Professional punters have done odds for a while. Don ? from the legal Eagles wrote a revolutionary book about it.

        If you’re not getting better odds than the risk, over time you’ll lose because so much can go wrong in any contest, and the bookies margin makes it hard to get good odds. More mug punters in the pool make it easier to make money gambling.

        Seems to me the best bets these days are taking advantage of people backing loyalty (to say a footy team, Shorten) as opposed to reality of their chances.

        • Yep, mug punters are where the profits are at.

          Sportsmen are a great source — well paid boys sitting idle for long periods during the week. Tattoos and gambling to to fill the time.

          • Totes BeWokeMEMBER

            Absolutely Dom. Storm were better than an even chance IMO, 3 weeks out from the GF, but were paying over $4. Shorten was $1.20 or something ridiculous like that and was never going to win (though I foolishly left it alone). Pick the eyes out of it, and you can be way ahead over time.

            I used to have 7 text (or whatever it was called) and would bet, getting the best odds, all over the country at different tabs by phone. Of course we can’t do that now. Won a lot of money. I don’t really bother with stuff like that now but still enjoy thinking about what is and isn’t worth a bet. If I see something outstanding, I’ll jump in, and go hard.

            PS. I remember almost backing the whole field at best odds available around the country and taking a tiny margin. Tgey were the days.

    • Totes BeWokeMEMBER

      The best 3 bets I’ve seen in a decade. One i took in Storm winning the GF. The other was Trump in 2016, the odds were insane, and he was a near certainty. The other was Shorten losing. The only one I didn’t back was Shorten. I believed the hype. I wouldn’t bet on Trump today at $2.70 either. I just can’t tell this time. I think Qld Labor was a near certainty too but I didn’t look closely, but knew they were going to vote for a strong state border.

    • Totes BeWokeMEMBER

      Absolutely it was. I didn’t even think about it until afterwards.

      It was a near certainty and hardly anyone said it was coming.

      Turns out there’s money betting against wokeness.

  2. Arthur Schopenhauer

    The director of Phar Lap expected the race scene to take a number of days to film. He wanted all the horses to run in the historically correct order.
    The trainer organizing the horses was told he had as long as he needed. He responded, “No problems mate, I do it every weekend.”
    They shot it in 2 takes, over one morning. The second run matched the first, perfectly.

  3. I’m part carer for an 84 year old legend with Parkinson’s disease. He placed his first bet when he was 14 . Became a regular punter for the next 40 years then walked away. Raised a family , did well. He retired up the coast to live the good life , developed Parkinson’s and the drugs they put him on brought on compulsive gambling.He changed drugs and never looked at another race form .

    The legend never won or lost much and the continuous mathematical calculations required to be a punter assisted in keeping his mind sharp to this day.

    He was lead singer in a band which supported Nat King Cole when he toured Australia, he was golden gloves champion in the national reserves. Fed his family for years with a bread run supplemented by spear fishing.

    Great Aussie story …..he’s put $10 on number 13 after he dreamed about it last night. It matters not whether he wins just the fact that he’s engaged with something to tether him to this world. Good times.