Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

The private ADP jobs number in the US overnight disappointed overnight, basically due to a lack of healthcare jobs as that sector reels from the delta COVID outbreak. This wasn’t enough to shift risk spirits however, with Wall Street remaining relatively as only tech stocks lifted higher. The latest ISM manufacturing print was more upbeat, but a surprise fall in German retail sales saw the DAX pullback as European markets surged forward.  Risk currencies moved higher again as USD remained relatively weak while Treasury yields were volatile in between economic releases to basically finish unchanged.

Bitcoin bounced off key support at the $47K level again but notably was unable to make a new intrasession high for the week and is looking a bit spent here just above the $48K level on the four hourly chart:

Looking at share markets in Asia from yesterday’s session, where the Shanghai Composite finished 0.7% higher to advance on its breakout above the 3500 point level, closing at 3569 points while the Hang Seng Index lifted through the 26000 point level, rising 0.6% to finish at 26004 points. The daily chart is now properly firming into a bottom pattern, with price clearing its own high moving average but still shy of trailing ATR resistance above the 26000 point level. Early days yet, but watch for a follow through above to enact a new reflation rally:

Japanese stocks again did even better, with the Nikkei 225 finishing 1.2% higher to close at 28451 points, turning its swing long play into a proper breakout. The daily pattern always had more upside potential than Chinese stocks, with price bursting through ATR trailing resistance above the 28000 point level confirming a new uptrend. Futures are indicating another good start to the session with daily momentum nicely overbought and ready to move higher:

Australian stocks were the odd ones out on the GDP print with the ASX200 stalling again, closing 0.1% lower to remain slightly above the 7500 point level. SPI futures are down over 20 points so far in response to the volatility on Wall Street overnight with the daily chart still looking tenuous here in a tight band of resistance and support. Price needs to clear its own high moving average and remain well above ATR support at the 7360 point level to keep bulls hopes alive:

European markets had divergent fortunes with peripheral markets surging over 1% higher, while the FTSE was up 0.4%, the German DAX was the odd uberman out, closing with a scratch session at 15824 points. The daily chart is showing more and more hesitation with a continued failure to make any new daily highs or clearing of the high moving average since early August, with resistance firming at the 16000 point level. Its hard to be bullish here:

Only tech issues advanced on Wall Street with the S&P500 also finishing with a scratch session, having made no headway so far this week, closing at 4524 points. The four hourly chart shows prices basing around the 4500 point level with short term momentum retracing from the overbought levels so we could see a mild pullback to ATR support at the 4500 level proper as the BTFD crowd steps in once again:

Currency markets saw a continued weakness in USD following the ADP and ISM prints with Euro continuing to move higher, surging again above the 1.18 handle, but pulled back slightly later in the session. Momentum remains nicely overbought here and ready for another leg higher, but watch for a potential dip to trailing ATR support as we go into the end-game NFP print tomorrow night:

The USDJPY pair had the most interesting and wide ranging session, pushing up through the 110 level for a new weekly high before slammed back down later in the session to finish where it started the session, and indeed the week so far.  This remains a hesitant sideways pattern for the last couple of weeks and will require a solid move above the 110.20 level at least to get things moving:

The Australian dollar surged on yesterday’s GDP print and was able to hold on to most of the gains above the 73 handle overnight, and indeed above the trendline from the series of highs from last week’s reflation trade. The 73.80 level target is nearly reached so watch for some consolidation around this previous support, now potential resistance level to provide some volatility ahead:

Oil prices are trying hard not to fall asunder here following the reflation trade with Brent crude pulling back in a wide ranging session overnight to finish just above the $71USD per barrel level overnight, still unable to make a new daily high which is weighing on momentum. This keeps it just below the key overhead trailing ATR resistance level on the daily chart and well below the previous daily highs in late July/early August, so watch for daily momentum which is now rolling over and suggesting downside ahead:

Gold is still in a holiday pattern waiting for the right catalyst to springboard it higher with another steady session overnight keeping it well above the key $1800USD per ounce level. While previous resistance has been pushed aside, the question still remains if it can make it back to the mid July $1830 highs as daily momentum needs to exceed overbought levels for a proper rally:

 

 

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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