Macro Morning

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Australian dollar free falls as Fed hikes return

Risk sentiment continues to flip flop on economic releases and macro events with US services PMI surveys surprising to the upside alongside European measures as well, with some calming words from Fed officials helping. Wall Street rallied strongly, up nearly 2% across the board which will provide a catalyst for more buying in the region today. Currency volatility has not yet abated, with the USD continued to regain its recently lost strength with Euro still in reversal mode while the Australian dollar has failed to climb back above the 70 level following its post-RBA rate rise walloping. Bond markets saw roundtripping in yields with 10 year Treasuries hovering around the 2.7% level with more than 100bps in rate rises still predicted by the end of 2022, with 65bps at the next Fed meeting firming. Commodities remain volatile as oil prices pushed to a three month low, as Brent crude can’t get back above the $100USD per barrel level while gold rose slightly.

Looking at share markets in Asia from yesterday’s session, where mainland Chinese share markets were looking to hold on to scratch sessions despite increased tensions of Taiwan but sold off into the close, with the Shanghai Composite closing down 0.7% to 3163 points. Meanwhile the Hang Seng Index held above water yet was unable to cross back above the 20000 point barrier, finishing around 0.4% higher at 19767 points. Sentiment continues to dice with death on the daily chart with considerable overhead resistance and daily momentum readings remaining solidly oversold. It looks like the May lows will come under pressure soon – but watch those long tails on the recent daily lows which maybe some support building:

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