Macro Morning

See the latest Australian dollar analysis here:

Macro Morning

The latest US initial weekly jobless claims buoyed risk taking on Wall Street which was almost able to get back to its previous highs while a stronger Euro took the sails out of European bourses which retreated across the continent. USD strength is waning temporarily after being extremely overbought following last week’s inflation print, although the Australian dollar remains under a lot of pressure as iron ore continues to fall.  Treasury yields fell back slightly again with the 10 year pipping just below the 1.6% level while gold was largely unchanged at the $1870USD per ounce level. Other commodity markets had better fortunes with oil and copper futures both up over 1%.

Bitcoin looks like cracking through another layer of key support with a full move down to the $56K level overnight that was barely filled this morning to get back to the $58K level, now matching the October lows. The four hourly chart shows a market ready to rollover completely:

Looking at share markets in Asia from yesterday’s session, where mainland Chinese shares were down the most with the Shanghai Composite finishing 0.4% lower to close at 3520 points while the Hang Seng Index gave up on getting back on track, diving some 1.3% to close at 25305 points.  Price action wanted to follow through on the one-day breakout reversal, but hesitation over the medium term downtrend just can’t be pushed aside with minor short term support needing to hold:

Japanese markets also lost direction, with the Nikkei 225 closing 0.3% lower at 29598 points. Futures are indicating a muted start this morning as the USDJPY pair stabilised overnight, so combined with the minor risk off mood in general and waning daily momentum, this is likely to be a non-event session. Its still all about resistance overhead at 30000 points, which continues to look too strong here to get things moving back to the September highs:

Australian stocks were the only ones in the region to lift higher, but only just, with the ASX200 closing up 0.1% at 7379 points. SPI futures are again dead flat, indicating a mixed start as this break below the 7400 point level is not good news for bulls in the short term as lower commodity prices continue to weigh. The daily chart remains a jumble with a lot of internal buying support but no upside action above these levels as momentum continues to roll over to neutral settings:

European markets were unified this time with minor losses across the board with the German DAX finally pulling back, although it only lost 0.2% to finish at 16221 points. Momentum remains nicely overbought as the market wants to continue to push above the 16000 point level and while the daily chart looks nicely bullish, the recent reversal in Euro could slow things down marginally:

Wall Street did a little better although the headline DOW pulled back, the NASDAQ took back its recent losses to almost cross the 16000 point barrier while the S&P500 gained just over 0.3% as it almost got back to its previous record highs, finishing just above the 4700 point level. The four hourly chart is still showing that resistance above that should be easy to clear in this runaway bull market, with slowly rising lows indicating building support here at the 4670 point level:

Currency market volatility is swinging back the other way against the US dollar with Euro putting in a big swing rally overnight to arrest almost half the decline of this trading week. The union currency got back to the 1.1370 level as short term momentum reverted back from well oversold levels with my contention of such a move before another leg down still holding here. Although I will be wrong if we get a substantial followthrough overhead ATR resistance (don’t care about being wrong/right, its how much you don’t lose when you’re wrong that matters!):

The USDJPY pair was unable to follow up its big move from the previous session with Yen buying abating somewhat, but enough to create a stalemate of sorts here as the pair hovers just above the 114 handle. This retracement was not unexpected, but was relatively sharp but has proven that the 114 level is steady support. Watch for any move above the high moving average here on the four hourly chart for signs of a return to the previous highs:

The Australian dollar is still on trend and remains well below the 73 level despite a mid turn overnight that failed to gain traction. The continued pressure on iron ore price and the stronger USD continues to weigh heavily for the Pacific Peso, still setting up for more downside action – turn the four hourly or daily chart upside down and you’d be bullish:

Oil crude futures came back slightly after sharp falls previously with Brent up 1% to finish back above the $81USD per barrel level. Price action is on the cusp of breaking below the $80 level at daily ATR support with daily momentum switching to negative so a possible breakdown still looms:

Gold is just hovering along here above the $1850USD per ounce level, not yet making a new daily or weekly high, but wanting to get back to the session high before that bearish rising wedge pattern on the four hourly chart took the wind out of its sails. I’m continuing to watch short term support here to hold steady with momentum starting to wane it may come under pressure tonight:



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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