Friday night saw the release of the latest US jobs print – the non-farm payrolls or NFP for May – which came in on expectations although revisions and internal numbers show building weakness from the start of the year. Wall Street didn’t care and bid across the board mainly due to relief that it wasn’t as dire as predicted and with the backdrop of potential trade deals developing after weeks of TACO indecision. Currency markets saw a reversion of strength back to the USD on firming of the Fed’s interest rate expectations with the Australian dollar again failing to breach the 65 cent level.
Oil prices have been building internal technical strength recently and the headline positive NFP print gave Brent crude an excuse to push above the $66USD per barrel level while gold was the most unfortunate of the undollars and was sold off to the low $3300USD per ounce levels.
Looking at stock markets from Asia from Friday’s session, where mainland Chinese share markets were in a holding pattern with the Shanghai Composite only up slightly in the afternoon session while the Hang Seng Index lost nearly 0.5% but still remains well above the 23000 point level.
The daily chart shows a near complete fill of the March/April selloff although momentum is now picking up again and remains slightly overbought as the 90 day “relief” continues without any further positive news. Watch for any crack below the low moving average or 23000 point level but this looks a potential breakout:
Japanese stock markets however bounced back on the weaker Yen with the Nikkei 225 moving more than 0.5% higher to 37741 points.
Daily price action was looking very keen indeed although daily momentum has slowed down somewhat this week after clearing resistance at the 36000 point level with another equity market that looks stretched and ready to rollover again here. Watch ATR support closely which appears to be firming in recent sessions:
Australian stocks were unable to find any momentum with the ASX200 closing nearly 0.3% lower at 8515 points.
SPI futures are up more than 0.3% on the surge on Wall Street from Friday night. The daily chart pattern is still suggesting further upside is still possible as the inverted head and shoulders pattern is nearly complete with the RBA cut helping boost this but correlation with other risk markets will come into play here – watch as daily momentum is firming again:
European markets again could only managed some mild returns as all eyes were on the US jobs report as the Eurostoxx 50 Index finished just 0.3% higher at 5430 points.
Support at the previous monthly support levels (black line) at 5100 points is now firmly held with the bounce off the 2024 lows at the 4400 point level indicating a massive fill of this dump and pump action with the former February highs nearly complete. A rollover could still be forming here so watch for support at the 5200 point level proper:
Wall Street however rebounded across the board with the NASDAQ closing more than 1.2% higher while the S&P500 finished up 1% at 6000 points exactly.
The four hourly chart was previously supporting a potential slowdown action here that could be translating to a top on the daily chart as prices try to get back above the pre-Trump Tariff Tax day. This was again looking like a TACO trade as resistance seemed weak overhead although the potential for trade deals might give some more support.
Currency markets remain largely on trend against King Dollar amid the tariff/X/trade deal/US budget bill chaos but there was a small reprieve after the NFP print mainly due to a repricing in the Fed funds rate. This saw a mild move back towards the USD with Euro slipping back below the 1.14 level after breaching the 1.15 handle earlier in the week.
The union currency was pushed back below the 1.13 handle previously but support bounced back at the 2023 and 2024 highs with a breakout above trailing ATR resistance on the four hourly chart still underway. Medium term momentum remains very positive here but watch for a potential pullback to the mid 1.13 level again:
The USDJPY pair had a small rebound in the previous session and then pushed higher again on Friday night to make a new weekly high just below the 145 level.
I still contend we need to watch for any sustained break below the 139 level which completes a multi year bearish head and shoulders setup that could see the 110 to 120 level revisited. So despite this short term move on a potential trade deal, I’m still watching short term support that could come under pressure here again:
The Australian dollar had been pushed down on USD resurgence after blasting through the 65 cent level previously but remains unable to push above the previous breakout highs although the medium term picture still looks quite firm.
Stepping back for a longer point of view (and looking at the trusty AUDNZD weekly cross) price action has remained supported by the 200 day MA (moving black line) after bouncing off a near new five year low. Keep an eye on temporary support at the 63 cent level but this is still looking promising for the Pacific Peso:
Oil markets are now building after trying hard to get back on track with a positive reaction to Friday’s NFP report seeing Brent crude pushed above the $66USD per barrel level for several weeks.
The daily chart pattern shows the post New Year rally that got a little out of hand and now reverting back to the sideways lower action for the latter half of 2024. The potential for a return to the 2024 lows is still building here as domestic demand in the US is likely to continue to decline as the Trump Taxes take effect but watch for any breakout above the $66-67 zone:
Gold was moving like the other undollars against USD after finding some stability last week but suffered the most on Friday night with a steep fall back to the low $3300USD per ounce level after recently almost breaking above $3400USD per ounce level.
Short term support had firmed immensely in recent sessions showing real strength but momentum became considerably overbought so this was inevitable as price action has reverted back to the uptrend line from the April lows. This line had appeared broken but could be a false positive on temporary USD strength?
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!
