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Risk markets reacted fairly positively overnight to some weak economic data out of China and the US with Wall Street lifting slightly to continue its previous solid trading week. The USD as a result extended its gains with a near 1% rise against the major currencies with Euro the main casualty, but also knocking the Australian dollar off its perch as it retraced back to the 70 cent level. Bond markets saw some tightening of yields with 10 year Treasuries down back to the 2.7% level while interest rate futures are steady with 120bps in rate rises still predicted by the end of 2022. Commodity prices were weaker due to the stronger USD with Brent crude oil down over 3% back to the February lows while gold was unable to get back above the $1800USD per ounce level.

Looking at share markets in Asia from yesterday’s session, where mainland Chinese share markets went nowhere throughout the session with the Shanghai Composite finishing at the 3276 point level while the Hang Seng Index has retraced sharply, finishing down 0.6% to 20040 points. The daily chart is still showing considerable overhead resistance and daily momentum readings remaining negative as the moving average channel keeps trending down although there are signs of deceleration evident. The May lows could come under pressure soon if there is another break below the low moving average:

Japanese stock markets are still surging from their Friday solid session with the Nikkei 225 putting on more than 1% to close at 28871 points. The daily chart had been suggesting a breakout after finally clearing resistance at the previous highs at 28000 points with Friday’s effort pushing daily momentum up through the overbought level again. The overall monthly/weekly downtrend (sloping black line above) seems to be broken here after price action bunched up for so long. With very positive risk sentiment now, watch the 28000 point level to turn into support next:

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