Macro Morning

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Australian dollar free falls as Fed hikes return

Risk sentiment soured overnight as stock markets pulled back after being in a holding pattern waiting for the next Federal Reserve interest rate hike at the upcoming FOMC meeting this week. Both European stocks and Wall Street had lower sessions while on currency markets saw a resurgence in USD strength particularly against Euro and the Canadian dollar while the Australian dollar remained stubbornly high above the 69 cent level.  Bond markets saw some roundtripping of yields with 10 year Treasuries moving slightly lower to the 2.8% level, as US interest rate futures continue to indicate a 75bps rate rise at the next Fed meeting. Commodity prices were still volatile with Brent crude returning below the $100USD per barrel level while copper rose slightly and gold is slowly losing its recent gains to close below the $1720USD per ounce level.

Looking at share markets in Asia from yesterday’s session, where mainland Chinese share markets lifted strongly into the close with the Shanghai Composite closing up 0.8% to 3277 points while the Hang Seng Index had an ever strong reversal, up more than 1.7% to close at 20905 points.  Sentiment continues to wane on the daily chart with considerable overhead resistance and daily momentum readings remaining oversold as the previous swing play reverts back to the downtrend although some support is building at the 20000 point level:

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