Macro Morning

See the latest Australian dollar analysis here:

Macro Morning

Stock markets are in hesitation mode despite the clear US jobs report from Friday night as concerns over the Federal Reserve tapering their stimulus earlier than expected are not yet cleared. Bond yields are up slightly while Wall Street was quite mixed, with tech stocks falling back, while the USD slipped only a little against rebounding major currencies with gold almost back above the $1900USD per ounce level.  Other commodity prices fell back though, with iron ore the biggest loser again, while both Brent and WTI crude markets stalled at their recent highs.

Bitcoin fell out of bed last night and is continuing to fall this morning, tracking below the $34K level as it barrels in on the late May low. Is $30K the next level to drop?

Looking at share markets in Asia from yesterday’s session, where the Shanghai Composite finished up 0.2% to be one point shy of the 3600 point level while the Hang Seng Index  sold off smartly, down nearly 0.5% at 28787 points, still clearly unable to get back above the 29000 point level.  This price action remains not exciting at all as it fails to re-engage to the upside after the recent breakout with the inability to decisively clear resistance at the 29000 point level keeping this market contained:

Japanese stocks struggled with the stronger Yen despite the strong lead from Wall Street, with the Nikkei 225 closing nearly 0.3% higher at 29019 points. Daily futures however are looking a little more promising as price continues to bunch up at the recent daily highs around the 29100 point level, indicating a breakout is imminent, with the moving average band still moving higher as momentum accelerates:

The ASX200 also had a hesitant start to the trading week, dropping some 0.2% but still heavily supported here at 7281 points, not helped by a resurgent Australian dollar. SPI futures are up only 5 points so although we should see more upside here, momentum is extremely overbought with the potential for a mild pullback here on profit taking or if the Aussie dollar gains more strength after its recent big rebound following the US jobs report:

European markets diverged slightly with peripheral bourses lifting while the FTSE hesitated, gaining only a handful of points and the German DAX pulled back slightly, down 0.1% to finish at 15677 points. This daily chart looks promising with momentum nicely overbought and price action continuing to track higher, with an uncle point clearly at the low moving average for those who are risk averse here:

Wall Street was all over the place with the headline DOW losing nearly 0.4%, the tech heavy NASDAQ up the same amount while the S&P500 treaded water, slipping slightly to finish at 4226 points, still shy of its recent record high. Price action on the daily and four hourly charts is clearing to the upside here but as I said yesterday, we need another positive close and another record high before seeing the “all in crowd” get in again:

Currency markets pulled back from their highly volatile reaction to the US jobs report with Euro consolidating before lifting again overnight to just below the 1.22 handle. While this is nearly a 100 pip move since the NFP print, in context its taking it back to last week’s starting point and still doesn’t 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 deflated again as it pushed toward the low 109’s in an obvious deceleration move that remains slightly oversold but not over just yet. This price action creates a new weekly low below last week’s support at the 109.40 level so we could see more downside – watch for any flip below the recent very tight four hourly sessions:

The Australian dollar continued its big ride higher but again came unstuck when it reached the 77.70 level and was unable to threaten the dominant downtrend in play (upper sloping black line). Momentum is not yet overbought on the four hourly chart, and combined with the clear deceleration and waning intrasession momentum, we could see a reversion here in the short term back to the 77 handle proper:

Oil prices were muted overnight after USD heistation continued, with the Brent crude marker remaining just 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 is fighting back following the NFP print with another run overnight to almost get back above $1900 level. As I mentioned yesterday, price didn’t go near trailing daily ATR support at the $1850 level but it still 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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  1. I think the definition of hesitation is Reusa deciding if he should get one hour or an hour and a half. Or one or two ladies. The stock markets, nah, just some profit taking.

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