Macro Morning

See the latest Australian dollar analysis here:

Australian dollar climbs with global stock surge

It was a case of repeated expectations overnight on share markets at least, with the mixed Asian lead not upsetting the continued rise in European markets while Wall Street stumbled yet again in the wake of new tax increases for Biden’s new big infrastructure plan.  The USD made another high, pushing Euro and the Aussie dollar down again while Treasury yields fell back slightly but still remain above the 1.7% level as commodity prices put on solid falls across the board in the wake of OPEC admitted less demand for oil.

Bitcoin almost made a new weekly high overnight, pushing through the $58K level where it remains this morning as it tries to get back above its previous record highs above $60K. Momentum continues to be nicely overbought on the four hourly chart so watch for another attempt higher today:

Looking at share markets in Asia from yesterday’s session where the Shanghai Composite surged again going into the close, finishing up 0.6% to 3456 points while the Hang Seng Index is punched even higher, up nearly 0.9% to 28577 points.  Futures are looking a bit better this morning with price action showing a desire to get back to the previous support level at 28700 or so but momentum remains heavily oversold so this could be a short term reprieve only:

Japanese markets however put in scratch sessions on the back of comments from Governor Kuroda with the Nikkei 225 closing only 0.1% higher at the 29432 point level. The 29000 point level remains a key anchor point, with price action gravitating around that point of control since late February with futures showing a flat start for this morning despite another surge in the USDJPY pair overnight:

The ASX200 was the worst market again, this time lead down by the Brisbane lockdowns with a near 1% loss, heading back to 6738 points. SPI futures are up over 40 points despite the poor lead from Wall Street as the lower Aussie dollar gives a bit of a tailwind to local stocks. I still contend there’s still a lot of congestion to get through here on the daily chart above the 6800 point level as daily momentum again flops to a neutral setting:

European markets remained in a near bullish mood, pushing along mainly by the core German DAX kept which lifted almost 1.3% higher to crack through the 15000 point level. I note a rising bearish wedge pattern forming here on the daily charts as momentum gets a little ahead of itself so while these returns are not to be discounted, warnings signs are building that it’s going too far:

Red across the board on Wall Street overnight with the S&P500 finishing 0.3% lower and unable to breach the magical 4000 point level yet again. As I said yesterday, the four hourly candles were showing hesitation here with resistance building at the 3960-4000 point area as momentum starts to rollover. With price now moving back towards the low moving average around the 3940 level, caution abounds:

Currency markets continued to see domination of the USD against the majors overnight with Euro continuing its rollover as it almost breached the 1.17 handle in an expected further push lower. This takes price well below last week’s intrasession low and puts momentum into near extreme oversold mode so there is a probable small push higher here before another downleg:

The USDJPY pair continues its own surge and this time pushed through the 110 handle in a very solid move overnight. My concerns about momentum rolling over were unfounded as there seems to no reason to sell USD at the moment – this should be a nice tailwind for domestic Japanese stocks but has not yet translated in kind. Congestion here at the 110.30 level could result in a small short term dip down towards the 110 handle again to test support:

The Australian dollar continues to deflate, this time breaking through the 76 handle as commodity prices fell back across the board overnight. Price is almost below last week’s low and is almost ready to takeout key support levels at then return to the mid 75’s:

Oil prices pulled back on the OPEC demand admission with Brent crude off by more than 1% to finish at exactly the $64USD per barrel level. The daily chart was starting to firm to the upside here with a nearly clear breakout but as I said previously, I’m waiting for a proper move above that high moving average with ATR daily and psychological support at $60-61 still an uncle point going forward:

Gold has been struggling for awhile now and last night it not only caved, it gave up with a big move below the $1700USD per ounce level that took it back to the oversold February low. As I’ve been saying for awhile now, the previous short term bounce was nothing more than a small short covering move that couldn’t even get back up to previous strong resistance at the $1770 level. The longer term charts continue to signal a downside target at the 2019 pre-breakout highs around $1500, so watch out below if we get another daily low:

 

 

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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