Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

Last night saw an absence of volatility on risk markets due to the lack of economic events and Wall Street being closed for a long weekend. Stock market futures look good for a solid bounce across Asia this morning with further stability in the bond market helping. In currency land, the lack of volume saw a slight pushback against USD with Euro stabilising before slipping back down to its Friday starting point, while the Australian dollar remains under a lot of stress as the 70 handle remains a distant memory. Bond markets saw slight gains in yields, with interest rate futures still firming up to another 200 bps in rate rises by the Fed this year. Commodity prices fell back again, although oil prices stabilised later in the session as the iron ore complex continues to fall sharply, gold and copper both fell again alongside other industrials.

Looking at share markets in Asia from yesterday’s session, where Chinese share markets were steady with the Shanghai Composite basically unchanged at 3315 points while the Hang Seng Index put on some runs to be up 0.4%, closing at 21163 points. Despite this bounce, the daily chart is showing price anchored at trailing daily ATR support at the 20500 point level with daily momentum barely positive. Its still a fair way from the May lows at the 19000 point level, but watch for any break below the 20000 point level here very closely:

Japanese stock markets were still in correction mode with the Nikkei 225 index closing 0.7% lower at 25771 points. The daily futures chart of the Nikkei 225 however is showing a more modest start to the trading week given the “stability” on Wall Street on Friday night, but daily momentum is now well into the oversold zone to possibly wipe out the May lows at the 25500 point area:

Australian stocks are performed poorly in their first session of the week with the ASX200 finishing some 0.7% lower at 6433 points. SPI futures are finally showing a potential bounce on the open, up around 0.7% or so, that could finally put in a proper higher session. The daily charts continue to show that price is in near freefall that needs to recover well above the 6600 point level before calling any bottoming action as daily momentum is in the very oversold zone:

European stocks all had very positive sessions out the gate, with the FTSE leading the way, up more than 1.5% while the Eurostoxx 50 index eventually closed 0.9% higher to finish at 3469 points, but its nothing to write home about. The daily chart picture remains bearish at best as price hovers right on the previous daily/weekly lows from the March dip. Daily momentum remains in quite an oversold position with price needing to get back above the 3570 point area very quickly or it will roll over here:

Wall Street was closed for a public holiday, but S&P500 futures pushed some 1.1% higher and look to bounce back through the 3700 point zone on the re-open later tonight. The four hourly chart is still showing a very weak picture, with more hesitation than others building as the March lows remaining quite broken. To recover out of this correction requires a rally that must go through the 3845 point area, the lows from last week and then back up through the psychologically important 4000 point zone:

Currency markets pulled back significantly in volatility due to a lack of economic events with USD losing barely any ground from its Friday night finishing position. Euro gapped higher on the weekend open but it was a small move relatively speaking as it was pushed back down to the 1.05 handle proper throughout the session. While traders might be anticipating more ECB rate rises on the back of the BOE/SNB rises, as I said last week this repricing maybe temporary given the 75bps scheduled by the Fed next month, so watch for any retracement below former trailing ATR resistance here:

The USDJPY pair has stabilised at just below the previous weekly highs, just above the 135 area as the BOJ vacillates.   Price has come back almost to the previous highs near the 135 area, with short term momentum sharply inverting almost back to overbought levels as this dip is filled quickly. This sort of volatility is great for currency traders but does not give a good indication of trend with the potential for a rollover actually building again here:

The Australian dollar still can’t get any satisfaction here having rolled over last week with its bounce back above the 70 handle thwarted, it again was pushed down overnight to finish at the mid 69 zone. The RBA remains well behind the Fed here and I still contend the USD will continue to crush the Pacific Peso. This short term move higher was not unexpected, but was going against the grain with momentum never overbought, so watch for a retracement below the 69 handle next:

Oil markets are trying to stabilise after the end of week downside volatility that saw them slump 4-5% on Friday, with a small bounce overnight taking Brent crude back above the $114USD per barrel level.  Daily momentum has retraced from its overbought status but price is no longer supported at the $115 area and is now below the previous ATR trailing resistance level as well. The next area to watch is trailing daily ATR support at the $110 level:

Gold still can’t get out of its sideways bearish move with another consolidation overnight due to a lack of volume, as it remains stuck below the $1840USD per ounce level. Daily momentum remains negative as four hourly momentum is about to rollover,  and while the bounce off the $1800USD per ounce level is a good sign of a bottom forming, the short term trend is showing a series of lower low sessions, so its not yet enough to convince more buyers to step in:



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!wrong on your position, so cry uncle and get out!

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    • Ronin8317MEMBER

      Countries like Poland has been surviving on gas from Germany. When winter comes, will Germany allow it’s citizens to freeze to death so the Poles will not?

      There will be massive pressures on Kyiv for a ‘peace settlement’ before winter arrives. $70 oil will weaken Russia far more than fighting on the ground.

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