Last night saw risk markets stumble due to a lack of economic catalysts as traders await tomorrow’s US CPI print to see how sticky the inflation from the Trump regime’s stupid tariffs are affecting US consumers and hence the trajectory of the US Federal Reserve. The USD was mixed or slightly higher against the majors with Pound Sterling and Euro drifting lower but still near their recent highs. The Australian dollar stayed above the 65 cent level but wasn’t able to extend its recent highs as traders anticipate a 25 basis point cut from the RBA today.
Looking at stock markets from Asia from yesterday’s session, where mainland Chinese share markets were rising swiftly going into the close with the Shanghai Composite eventually able to finish 0.3% higher to remain well above the 3600 point level while the Hang Seng Index is treading water, gaining just 0.2% as it fails to get back above 25000 points.
The daily chart shows a complete fill of the March/April selloff with momentum reversing after failing to make new highs. Resistance at the 25000 point level has turned into a stall play here with support at the 24000 point level holding:
Japanese stock markets were closed for a holiday with Nikkei 225 futures indicating a solid start to the session today above the 42000 point level.
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. ATR support has been ratcheting up for awhile but is not stopping:
Australian stocks were able to make some steady gains, with the ASX200 lifting 0.3% higher to 8832 points. SPI futures are down slightly due to a poor lead from Wall Street overnight.
The daily chart pattern is suggesting further upside still possible with a base built above the 8500 point level as daily momentum has regained its overbought status:
European markets are not moving higher as confidence wanes across the continent with the Eurostoxx 50 Index closing 0.3% lower overnight to finish at 5331 points.
Weekly support hadn’t moved in a few months but has now been decisively breached, with the market unable to get push any further above the pre “Liberation Day” highs. There could be daylight below but momentum was quite oversold so this might be overdone:
Wall Street is slipping again despite wanting to make new record highs with the NASDAQ down 0.3% alongside the S&P500 which finished at 6373 points in a similar dour session.
The four hourly chart was looking confused with recent support at the 6200 point level coming under pressure before resistance at the 6350 point level was taken out as more record highs were made. This is looking like another attempt at getting back towards the 6500 point level but short term momentum is just not there yet so I’d be cautious as we head into the CPI print tomorrow:
Currency markets remain somewhat against USD following a succession of poor US domestic economic prints with expectation of cuts coming from the Federal Reserve holding back the “King” but the messaging is not quite as dovish across the board. Euro and Pound Sterling among others drifted lower with an empty economic calendar with the former almost crossing below the 1.16 handle proper.
The union currency had been building strength continuously as bad domestic economic news from the US overshadowed any continental slowdown but had reversed that trend in recent weeks. Short term momentum was suggesting a proper rout with a new weekly low at the 1.14 handle but this is a strong reversal that may have more upside:
The USDJPY pair is getting pushed back above its recent point of control at the 148 level on temporary Yen weakness following the Japan/US trade “deal” as it accelerated overnight despite the lack of Japanese traders away on holiday.
The previous price action was sending the pair beyond the March highs and had the potential to extend those gains through to start of year position at the 158 handle but the jobs surprise puts this all on the backburner. There could be another attempt here to get back to the 150 handle in the short term however:
The Australian dollar recently took a big hit on the weaker unemployment print and struggled to not make new weekly lows on more USD strength, but is still managing to hold above the 65 cent level even though the RBA cut that is expected in today’s meeting is likely to see a swift reversal
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, as there is potential for a rollover if Fed signalling does not become more dovish:
Oil markets tried to stabilise overnight with Brent crude remaining just above the $66USD per barrel level to steady at the recent weekly lows.
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 rally up to the $80 level after making new substantive daily highs was gaining traction but needs more support in the short term:
Gold is failing to revive its recent bounceback amid concerns that the stupid Trump regime tariffs will extend to the shiny metal as it continues to reverse below the $3400USD per ounce level.
Short term support had been under threat most of the last three weeks with price almost returning to the late June lows as the USD gained strength. Daily momentum was getting back into the positive zone, as support was being built but the life has gone out of this recent rally:
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!