Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

Stock markets continue to love the US election non-outcome as Europe and Wall Street lifted again overnight with Treasury yields coming back slightly as currency markets went into violent anti-USD mode. Oil prices retraced slightly but undollar currencies like gold and Bitcoin shot to the moon! The latest FOMC meeting was a non-event although some language changes possibly added to the USD selloff. The BOE however added more fire to its QE program, lifting Pound Sterling back to its October high.

Looking back at share markets in Asia from yesterday’s session where the Shanghai Composite surged towards the close, closing 1.3% higher to be above 3300 points while in Hong Kong the Hang Seng Index was the best in the region, up a stonking 3% to 25695 points. The daily chart shows this big surge bringing a lot of upside volatility to the technical picture with a new monthly higher as the lower USD helps accelerates the region on. This is wildly overbought and should retrace soon:

Japanese stock markets also did very well with the Nikkei 225 closing 1.7% higher at 24105 points. Futures are suggesting more upside here on the open this morning with another market making new monthly highs in the wake of the election. Again, extremely overbought so we could see some profit taking to bring it back below 24000 points particularly if Yen buying continues:

The ASX200 has not escaped the upside volatility with a nice finish, closing 1.3% higher at 6139 points. The daily chart is ready to breakout again here above 6200 points but this might be thwarted by the far too high Aussie dollar. Not yet overbought however so watch those former October highs to come under pressure soon:

European markets had another extremely positive session on short covering with the German DAX closing another 2% higher to 12568 points. The daily chart is showing price wanting to clear the prebreakdown level at 12500 points in what has been a great reflation trade so far. Momentum is not yet positive and I would keep stops tight here at the high moving average on any “unexpected” volatility:

Wall Street keeps hopium going for a Biden victory with a locked senate (thus keeping Trump’s tax cuts safe), with the S&P500 surging another 2% higher to 3506 points overnight, now up nearly 10% since the election started. This is way overbought of course and if any further election chaos occurs, I can see a retracement easily happening:

The NASDAQ followed up its biggest surge so far with another, up nearly 2.6%, taking it back to the early October levels after recently getting back above the 11000 point level proper. The next stage is properly clearing the downtrend from the August bubble like highs (upper black sloping line) at around 12000 points:

Bitcoin’s breakout is now pushing aside the $15000 level in a huge blowoff trade that takes it well past the 2019 nominal high (upper black horizontal line) – what more can be said but boom:

Currency markets are remaining against USD as Euro swings higher again to remain above the 1.18 handle, mimicking the reflation trade on stock markets. The four hourly chart had been  showing a potential build up for a new breakout towards the 1.1750 level and here it is, but like a lot of other undollar assets, can it hold in such an overbought state:

The USDJPY pair was the big loser overnight, dumped significantly as a weaker USD weighed once more, sending it back below the 104 handle. As I said earlier this week, momentum was never properly overbought and was forecasting further falls ahead back down to the 104 handle proper and now, a four year low:

The Australian dollar is zooming higher in response to the weaker USD with yet another new weekly high, bursting through the 72 handle again amid the US Election volatility.  The question remains is this sustainable so watch for the former weekly high at the 71.40 to act as temporary support for the rest of the week:

Oil prices retraced slightly overnight with Brent falling back to be just below the $41USD per barrel level. The daily chart is still showing momentum only in a swing reading, not yet positive with the previous session lows at the $41.60 level proving new resistance:

Gold is no longer hanging on to its re-inflation but re-engaging with a massive blowout in the wake of the election and FOMC meeting, lifting over $40 overnight to be just below the $1950USD per ounce level overnight. The four hourly chart was showing steadying at the $1900 level as momentum regained a positive balance, but this has been surprising! Again, massively overbought and ripe for a correction:

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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