Macro Morning


The fallout from the stronger than expected US jobs report on Friday night has been overshadowed by political ructions in Europe although there has been a lot of speculation on Wall Street about the Fed moving into hesitation mode as well. While US stocks advanced, European shares dropped alongside Euro as the continent faces a wave of snap elections with the USD still looking very strong against the major currency pairs. The Australian dollar was able to recover slightly to just above the 66 cent level over the weekend gap but looks weak here as local traders return to their desks.

10 year Treasury yields lifted slightly again after their big moves higher on Friday night to well above the 4.4% level while oil prices climbed back with Brent crude finishing just above the $81USD per barrel level in a strong upward session. Gold however remains under the pump, only managing a small relief bounce overnight to head back above the $2300USD per ounce level.

Looking at markets from yesterday’s session in Asia, where mainland Chinese share markets were down mid session but were able to recover by the end as the Shanghai Composite finished flat again while the Hang Seng Index was closed due to a holiday.

The Hang Seng Index daily chart was starting to look more optimistic with price action bunching up at the 16000 point level before breaking out in the previous session as it tried to make a run for the end of 2023 highs at 17000 points with the downtrend line broken. Price action was looking way overextended but this retracement is now taking some heat out of the market but needs to stop soon before moving into corrective mode:


Meanwhile Japanese stock markets were able to rally with the Nikkei 225 closing nearly 1% higher at 39038 points.

Price action had been indicating a rounding top on the daily chart with daily momentum retracing away from overbought readings with the breakout last month above the 40000 point level almost in full remission. Short term resistance had been defended with short term price action now rebounding off former support at the 39000 point level with short term momentum still positive wtith futures indicating another lift on the open:


Australian stocks were also closed for the King’s Birthday long weekend.

SPI futures however are down 0.4% despite the slight rise on Wall Street overnight. The daily chart was showing a potential bearish head and shoulders pattern forming with ATR daily support tentatively broken, taking price action back to the February support levels in mid April. Momentum is finally getting out of its oversold condition and now rebounding back into the positive zone with a return to the 7900 point level possible, but resistance overhead beckons:


European markets continue to fall to follow through on the post-ECB meeting gains and fell back across the continent with the Eurostoxx 50 Index closing 0.7% lower to 5051 points.

The daily chart shows price action off trend after breaching the early December 4600 point highs with daily momentum retracing well into an oversold phase. This was looking to turn into a larger breakout with support at the 4900 point level quite firm with resistance still looming at the 5000 point barrier:


Wall Street was not impressed by the NFP jobs report with both the NASDAQ and the S&P500 gaining around 0.4% to new record highs with the latter advancing past the 5300 point level, closing at 5360 points.

The four hourly chart showed the Friday night rebound coming up against a lot of hesitation here at the 5300 point level with short term momentum ready to launch higher as it turned into a solid breakout, but not price action is pausing. This was a good setup before the NFP print but market expectations about what the Fed will do are causing a lot of hesitation here:


Currency markets remain in the thrall of USD following Friday night’s US job numbers with the major currency pairs still looking quite depressed the Monday morning after. Euro is still leading the way, unable to recover above the 1.08 handle with a gap down over the weekend.

The union currency had previously bottomed out at the 1.07 level at the start of April as medium term price action with a reprieving reversal in price action back towards the 1.09 level before its own inflation print. Medium term support was briefly tested at the 1.08 level with momentum rebounding back into the positive zone, but not able to sustain overbought conditions before this flummoxing back to the 1.08 handle again:


The USDJPY pair was able to hold on to its post NFP gains, starting the week above the 157 handle with a small gap higher although it seems to be running out of momentum.

Short term momentum had gotten out of oversold condition but was not yet positive with price action suggesting a further pause or rollover here before the print with this move taking the pair back to last week’s finishing point. Overall this is not yet exciting enough as monthly resistance looms at the 158 level:


The Australian dollar in the absence of local traders was able to get back above the 66 cent level at the start of the week but remains near a two month low in reaction to the US jobs print on Friday night.

So far the Pacific Peso hadn’t been able to take advantage of any USD weakness with momentum barely in the positive zone in recent weeks with price action whipsawing around the mid 66 cent level as a point of control. This breakdown does not bode well for the rest of the month:


Oil markets are trying hard to get out of correction mode with Brent crude surging overnight to break above the $81USD per barrel level after previously dropping down the $76 level last week amid market volatility.

After breaking out above the $83 level last month, price action has stalled above the $90 level awaiting new breakouts as daily momentum waned and then retraced back to neutral settings. Watch daily ATR support here at the $86 level which is still broken and will likely be resistance for sometime with short term momentum still quite negative:


Gold also had a mild uptick over the weekend break to return above the $2300USD per ounce level, but is still looking incredibly weak here.

The biggest casualty of the US jobs report on Friday night, the shiny metal is still at a weekly low with short term momentum quite negative so watch for another potential rollover here:


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!