Macro Morning

See the latest Australian dollar analysis here:

Macro Morning

Not so good news for the US middle class with the latest unemployment data disappointing, but great news for US stocks and the rest of the risk complex as the worries over the Federal Reserve tapering their ebullient bond buyer programs were quickly dashed. The once resurgent USD fell sharply against everything, while Wall Street surged, bond yields plunged and commodity prices lifted sharply. This will translate into a solid start to the week here in Asia, although local stocks may face the headwind of a much higher Australian dollar.

Bitcoin continued to track sideways all last week with a vain attempt at breaking out towards the $40K level failing with another leg down from the $60K plus highs. Notably the daily chart does show some deceleration into the $37K zone from the early May drop with no new weekly low made, so that’s a good sign for the HODLers out there. There is the potential for a breakout above the $39-40K zone, but it maybe shortlived:

Looking at share markets in Asia from Friday’s session, where the Shanghai Composite finished up a few points to remain just below the 3600 point level while the Hang Seng Index was up briefly, bu then fell back at the close to finish 0.2% lower, again retreating below the 29000 point level. This price action is not promising at all as it tries to re-engage to the upside after the recent breakout as the inability to decisively clear resistance at the 29000 point level keeping this market contained:

Japanese stocks were a big downer, despite a much lower Yen, with the Nikkei 225 off by 0.4% to close at 28941 points, also below its own critical 29000 point level. Daily futures however are looking much more promising with the recent daily highs bunching up around the 29100 point level with the opening session this week looking to push through resistance here with the moving average band still moving higher as momentum accelerates:

The ASX200 continued to outperform with a solid 0.5% rise to close at 7295 points, helped along by a depressed Australian dollar before the NFP print. SPI futures are up nearly 10 points so we should see more upside here despite momentum being extremely overbought, so there is still the potential for a mild pullback here on profit taking or a new uptrend in the Aussie dollar following the US jobs report:

European markets firmed immediately on the open as they anticipated the latest US jobs data print, with the German DAX lifting the most, up 0.4% to finish on a new weekly high at 15692 points. With the Fed taper now off a ways, reluctance to continue to buy up European stocks is fading with prices still on trend and momentum remaining slightly overbought, its getting a bit more interesting to be long here:

Wall Street loved bad news for Main Street with tech stocks rallying nearly 1.5% while the S&P500 gained nearly 1% to finish near its recent record high just above the 4200 point level. Price action on the daily chart is starting to clear up here after going through a widening megaphone pattern and briefly touching the 4170 support level. Tonight’s session will be very interesting to watch – if we get a positive close and another record high, its all in again:

Currency markets were again the most exciting place to be in the final session of the trading week as the US jobs report and FOMC Mester shook things up by extending the Fed Taper and thus pushing USD back into the dirt. Euro only managed a 60 pip bounceback after slipping nearly a full handle in the leadup to the NFP print, so this doesn’t quite put it out of danger with some considerable resistance overhead at the 1.22 level and at the previous weekly highs at the 1.2270 to overcome:

The USDJPY pair was thwarted after its recent breakout overnight as the push through the 110 handle to what could have been a new weekly high has turned into a return to the previous weekly low at the mid 109s. Momentum is back in negative territory but not yet oversold with no new weekly low providing a modicum of support for this weeks trade:

The Australian dollar had one of the biggest rides higher after getting walloped previously, with a push straight through the 77 handle to almost make it back to its previous intraweek high at the mid 77s. Momentum was extremely oversold with all eyes on the 75.80 monthly support level if the jobs print was “too good” but this seems to be averted for now. I’m watching to see if the Pacific Peso can get back above the 77.70 level and threaten the dominant downtrend in play (upper sloping black line):

Oil lifted slightly on Friday night following the US jobs report with a lower USD helping Brent crude, pushing up again above the $71USD per barrel level. There is still the potential run up to the 2018 high at $83 or so but I’m cautious here despite some good momentum:

Gold was hit hard on the private jobs data and initial jobless claims print on Thursday night, pushed 2% lower to take it back to the $1870 level and seemingly ending its runup from below the $1800 level. But the reversal in USD post the NFP report has seen a return to strength for gold which finished just below the $1900 level. Notably, price didn’t go near trailing daily ATR support at the $1850 level but requires another solid session in the short term of the anticipated run up to the former highs may prove too elusive before the Fed actually does Taper:

 

 

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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