A busy night of data, geopolitics, plus absurd politics as the Trump regime looks to fire Fed Chair Powell because he won’t lower rates (even though he only has one vote and there’s clear evidence of an inflationary push from the tariffs). This kept Wall Street on its toes but eventually Trump TACO’d out again paving the way for a strong risk bid. The latest PPI print was somewhat mild but core PCE indicates the inflationary push is having a negative effect on the American consumer. The USD oscillated wildly on the Powell speculation and then the PPI print, losing ground against the Loonie and Pound Sterling which had an actual hot inflation print in the UK. The Australian dollar is just holding on at the 65 cent level while Treasury yields remain elevated with the 10 year pulling back slightly on the print.
Looking at stock markets from Asia from yesterday’s session, where mainland Chinese share markets were steady with the Shanghai Composite just above the 3500 point level going into the afternoon session while the Hang Seng was also treading water to stay just above the 24000 point level.
The daily chart shows a near complete fill of the March/April selloff although momentum has now reversed after being slightly overbought as price action meets trailing support at the 23000 point level. This was looking like a strong bounceback with firm support at the 23000 point level as a springboard:
Meanwhile Japanese stock markets were not moving around much as well with all eyes on the bond market with the Nikkei 225 unchanged just below the 40000 point barrier.
Daily price action was looking very keen indeed as daily momentum has accelerated after clearing resistance at the 36000 point level with another equity market that looks very stretched and breaking out a bit too strongly here. Watch ATR support continue to ratchet up but also for this rally to have a pullback:
Australian stocks were the worst in the region with the ASX200 down nearly 0.8% to get back below the 8600 point level. SPI futures however are up nearly 0.7% due to the rebound on Wall Street overnight.
The daily chart pattern is still suggesting further upside is still possible with a base being built here and although daily momentum has eased off from its slightly overbought status its still very positive:
European markets fell back again as the US tariff clobbering continues to weighs on risk with the Eurostoxx 50 Index closing 1% lower at 5298 points.
Weekly support hasn’t moved in a few months but it was never fully breached, giving time for the market to build a base and breakout here back to the pre “Liberation Day” highs. This looks like a strong, if somewhat overdone breakout with some positive momentum to the upside but watch for further retracement on any Trumpian volatility:
Wall Street breathed a sigh of relief over the Powell comments with the NASDAQ up 0.2% while the S&P500 eventually closed some 0.3% higher at 6263 points.
The four hourly chart looks confused again with recent support at the 6200 point level about to come under pressure while resistance at the 6350 point level not yet breached as bids to extend these record highs are not yet forthcoming:
Currency markets had only just absorbed the June US CPI print then had to react to the constant verbal diarrohea from Trump on Powell as they then dissected the PPI print, sending USD in somewhat of a stall and a spin before stabilising. Euro was all over the place before settling above the 1.16 handle but still looks weak here without much support.
The union currency has been building strength continuously as bad domestic economic news from the US overshadowed any continental slowdown but has reversed that trend and then some in recent weeks. Short term momentum was suggesting a proper reversal with support at the 1.1650 mid level taken out but is considerably oversold:
The USDJPY pair launched to the moon in the previous session, breaking through the 148 handle on the US CPI print, but came back just as strong to settle below that level.
I think my contention of a completion of the multi year bearish head and shoulders setup by breaking below the 139 level is off the cards for now, but watch for the inevitable pullback on too much strength here and of the course the TACO trade:
The Australian dollar had been relatively weak going into the RBA meeting last week after looking like holding on to the 65 handle but has been finding resistance at the 66 cent level too hard to overcome as it broke down on the US CPI print.
Last night saw some intrasession volatility but it eventually settled just above the 65 handle again. Keep an eye on temporary support at the 63 cent level and also the series of lower highs in recent weeks of signs of less internal support:
Oil markets were putting in a small bounce on the unexpected spike of OPEC+ production but are still struggling to make significant gains with the trend starting to weaken as Brent crude retraced below the $69USD per barrel level overnight.
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 previous lows is still there if it cannot make a substantive new daily high.
Gold was struggling after managing to get out of its recent hole to bounce back above the $3300USD per ounce level but managed to find some life in the post PPI volatility to settle just below the $3350 level this morning.
Short term support has been under threat most of the last three weeks with price almost returning to the late June lows as the USD gains strength. Momentum is retracing back from its slightly overbought position to a negative setting so watch for a full rollover below ATR support next:
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!