While interest rate expectations continued to rise overnight, risk markets stabilised but remain cautious as we head into the Jackson Hole central bank conference today. The USD was basically unchanged against most of the major currencies, with Euro still below the parity while the Australian dollar is just holding on to the 69 cent level as commodity prices continued to lift. Bond markets however sold off further with 10 year Treasuries pushing above the 3.1% level while interest rate futures lifted showing more than 60bps rise at the next Fed meeting and a 130bps total rise by the end of the year. Crude oil lifted about 1% as supply concerns continued, with Brent crude maintaining above the $100USD per barrel level while gold bucked the undollar trend to get back above the $1850USD per ounce level.
Looking at share markets in Asia from yesterday’s session, where Chinese share markets started steady but have sold off throughout the entire session, with the Shanghai Composite closing nearly 2% lower at 3215 points while the Hang Seng Index is still going backwards, down 1.1% and still below the 20,000 point level at 19277 points. The daily chart is still showing considerable overhead resistance and daily momentum readings surging in oversold mode as the moving average channel accelerates lower without any upside pressure. The May lows are coming under pressure with another break below the low moving average likely:
Japanese stock markets are still falling as well with the Nikkei 225 closing 0.4% lower, extending the losses below the 29000 point level at 28313 points. The daily chart is showing a very abrupt reversal here as the 29000 point level has turned into strong resistance. Momentum has crossed over so a swing short play down to trailing ATR support at the 28000 point level is likely underway, although internal buying support maybe building so watch for a potential positive session today:
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