Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

Risk markets were fixated on the all-important US unemployment print (non-farm payroll) on Friday night, which disappointed with a big undershoot (200K vs 550K expected), upsetting stock markets which were up 1% or more as Wall Street slumped more than 1% on the print. The bond market continues to broadcast earlier than expected Fed rate hikes with the 10 year Treasury yield almost breaking below the 1.4% level while currency markets saw quite a mixed result with Euro almost flat while risk currencies like the Aussie and Loonie slumped.  Commodity markets saw a big drop as well, with both Brent and WTI oil down in a very volatile session as gold tried to bounceback but is still struggling to get back above the $1800USD per ounce level.

Bitcoin was in a slight downtrend coming into the last session of the week but managed to slump swiftly lower, breaking well below the $54K level.  The daily charts have been looking bearish for sometime now as daily resistance at the $59K level continued to firm with short term support taken out at $56K and daily momentum nicely oversold:

Looking at share markets in Asia from Friday’s session, where mainland Chinese shares did pretty well with the Shanghai Composite finishing up nearly 1% to close the week out above the 3600 point level points while the Hang Seng Index continued to flub its rebound with a 0.2% pullback to 23766 points. This market just can’t get out of the doldrums with daily momentum remaining well oversold with upside price action going nowhere indicating a lack of buyers. There is the potential for more downside here so watch terminal support at the 23000 point level to come under pressure next:

Japanese markets finally found some stability with the Nikkei 225 closing 1% higher at 28029 points.  Futures however are indicating a poor start to the trading week, not helped along by a stronger Yen from Friday night and the slump on Wall Street. Price may continues to threaten to break below the September support levels just above 27000 points, as momentum remains in a very oversold condition and the potential for an upswing setup evaporates here:

Australian stocks had another mild lifting session to finish the week out with the ASX200 closing 0.2% higher at 7241 points. SPI futures suggest a minor pullback, potentially a weak selloff given the much lower Australian dollar but don’t discount the fact that this market is very weak internally with price action still wanting to rollover and head back to monthly support at the 7100 point level.  The lack of a new daily high since the late November slump is weighing on sentiment here:

European markets were looking to breakout on Friday night but the US jobs print staved off any risk taking with mild falls across the continent to finish a very unsettled trading week. The German DAX finished more than 0.6% lower to 15169 points, with more potential downside as Wall Street slumped. The daily chart was showing continued buying support at the September lows as price action bunches up here, but the bears are still in charge here as daily momentum remains extremely oversold as the US NFP should’ve provided a positive catalyst to get out of trouble:

Tech stocks led the carnage on Wall Street following the very disappointing US jobs print with the NASDAQ losing more than 2%, now down nearly 6% in the last month, while the S&P500 almost lost 1% even, sending it back to the 4538 point level. The daily chart shows price action unable to get out of its slump since the November highs, with the BTFD crowd failing to step in post the Powell taper comments earlier in the week and the inability to overcome the Omicron scare. This has all the potential of a proper correction in the making and turning away Santa, so watch for any close below the recent session lows at the key 4500 point level:

Currency market volatility sparked higher again on the back of the US NFP print, although Euro surprised by being contained within a tight range and eventually finishing just above the 1.13 handle. The four hourly chart however continues to show a decline from the start of the week with the inability to push above that trendline while support remains fairly firm at the 1.1270 ATR level. Momentum is still nominally negative but not oversold so there is the potential for a breakout here but I remain cautious:

The USDJPY pair was trying to ramp up alongside Japanese shares but was slammed lower following the jobs print and the slump on Wall Street, with Yen safe haven buying sending it back to the midweek intrasession low just below the 113 handle. The pair remains in a fragile state as longer term charts suggest more downside price action as short and medium term momentum remains in an oversold negative state:

The Australian dollar however completely fell out of bed on Friday night with the risk off klaxons going off loudly, turning the steady medium term downtrend into a steep selloff, crossing below the key 70 handle for a year plus low (July 2020). Lower commodity prices, a much stronger USD, lower iron ore prices and the risk-off mood continue to weigh here with buyers nowhere to be seen:

Oil tried to rally alongside European shares following a big selloff in the wake of the Omicron breakout, but any momentum was quickly cut off by the US jobs print with Brent again finishing back below the $70USD level. Short term volatility remains quite high with no real signs of bounceback as the daily chart shows price still on a downtrend with the former monthly resistance level at $77 still a long way away, proving too strong alongside very negative momentum:

Gold is still looking depressed here but managed to hold off any major selldowns in the wake of the undollar reaction to the disappointing US jobs report. The shiny metal actually made a new daily high, getting back above the $1783USD per ounce level, dicing with the former daily support level. Momentum remains quite oversold in the short term but price action might be broadcasting a possible bottom here if a further new daily high can be made and set sail for the $1800 level:

 

 

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. Nasdaq is toast. MACD on the day has crossed zero. On the week its crossing signal and the month it really where its worrying with the peak looking like its in and headed straight for a signal cross. RSI on the month in overbought as well. Trend line is only support now which i dont think will hold. This is going down hard