Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

The newsflow overnight was dominated by politics in the US and the latest final GDP prints, which sent USD off into different trajectories against commodity currencies but kept it foot on the neck of Euro. Wall Street responded poorly to the GDP print and the miss in initial jobless claims, but also some end of month/quarter window dressing didn’t help stave off a wider selloff.  Treasury yields pulled back again to the 1.5% level while European shares also gave back all their recent gains and remain depressed. Commodities saw minor upside action with oil up 0.5% while gold gained more than 1%.

Bitcoin was falling back to its recent weekly lows at the $41K level but showed some life overnight lifting up towards the $44K level before hitting overhead trailing resistance. While short term momentum has switched to positive readings its not yet overbought and nor has price exceeded the start of week high so this is wishful thinking for now:

Looking at share markets in Asia from yesterday’s session, the Shanghai Composite loved the PBOC shenigans, lifting strongly into the close to finish nearly 1% higher to 3568 points while the Hang Seng Index was neutral at first before selling off to finish 0.4% lower at 24575 points.  The daily chart remains under a lot of pressure here despite some support continuing to build at the 23500 level, with a very small potential for a breakout above the high moving average at the 24800 point level:

Meanwhile Japanese markets continued to pull back, with the Nikkei 225 closing 0.3% lower at 29454 points. Futures are indicating a pullback this morning, not helped by Yen finally inverting after an epic rise in USD against it. Support had been pretty firm at the 29300 point level, but this could threaten it as the inability to breakout above the 30000 point resistance zone in recent weeks is weighing on positive sentiment here with a potential move back down to 29000 points:

Australian stocks finally saw some relief, moving sharply in line with iron ore fortunes and ignoring the rampant Victorian COVID breakout with the ASX200 jumping nearly 2% to finish at 7332 points. It will be short lived however, with SPI futures looking to reverse almost all of those gains, currently down over 1.5% as the selling returned on Wall Street overnight.  The daily chart is now poised to break below monthly support at the 7000 point level that will next come under threat as buyers evaporate:

European markets again started off upbeat but couldn’t hold back to the poor sentiment as selling returned across the continent with the German DAX losing 0.7% to finish at 15260 points. The previous session was only a mild improvement given the overall picture remains quite bearish and last night’s session proved as much as daily momentum remains oversold as price action returned to the previous lows. The 15000 level is key here:

Wall Street was given only a very slight reprieve overnight on the back of Fed Chair Powell’s comments while tech stocks still under pressure as the NASDAQ fell 0.4% while the S&P500 lost more than 1.2% to close at 4307 points. The four hourly chart showed how meek the previous session was with no real upside potential displayed, with the neckline at the 4400 point level completely unchallenged. This takes the market to a new weekly low, alongside NASDAQ and does set up for a proper corrective phase:

Currency markets had a curious session overnight with USD strength waning in some areas -notably against Yen – but still strengthening against Euro with continued selling pressure keeping it well below the 1.16 handle for another yearly low. Momentum readings remain extremely oversold in the short term with overhead trailing ATR resistance now at the 1.1650 mid level, with the chance of a small swing back evaporating again:

The USDJPY pair finally stopped on its course ever higher, failing to cross above the 112 handle after creating another new weekly and monthly high. Price action has pulled back below the previous highs at the mid 111 level with momentum retracing from the nicely overbought level to almost threaten ATR support at the 111 handle proper. This will have a big headwind effect on Japanese shares but also shows a risk off situation is brewing:

The Australian dollar was able to move solidly higher overnight after bouncing off the recent monthly lows below the 72 handle as USD wobbled against the commodity majors following the GDP print. Momentum readings were extremely oversold so this short term blip is not unexpected, but the longer term charts are still pointing to more downside below with parity at the 70 major handle the next likely target:

Oil prices were looking to breakout once again overnight, after recently making new three year highs but only saw a modest move higher to almost match the previous daily closes, with Brent crude futures managing a 0.5% finish just above the $78USD per barrel level. Price action is still hovering above the medium term downtrend with momentum readings now retracing from the overextended oversold levels here with support at the low moving average level still a good uncle point:

Gold bounced back the hardest on the jobless claims miss, matching its start of week high at just above the $1750USD per ounce support level in a surprising breakout. This may have legs if momentum can swing back to a proper overbought status, with price action requiring another step above the current level, otherwise the full retracement to the previous flash crash lows at the $1700USD per ounce level is likely to come to pass:

 

 

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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Comments

  1. Bruce Brucington

    Things are likely to go up, unless they go down.

    Tough work out there right now and I’m glad I’m all in on 1 bedroom apartments in western sydney

  2. russbw the idioticMEMBER

    pretty wild close on spx, literally held by a bees at the last line, last minute.