Friday night saw the release of the latest US retail sales numbers with import prices spiking and consumer inflation expectations rising again, getting traders further worried on Wall Street. The USD was on the ropes against all the majors, with oil prices also pushed slightly lower after stalling all week while Treasuries where sold off in the wake of the domestic prints. The Australian dollar is still holding on despite the recent RBA cut to remain just above 65 cents against USD.
Looking at stock markets from Asia from Friday’s session, where mainland Chinese share markets pushed higher going into the close with the Shanghai Composite up more than 0.8% to almost get above the 3700 point level while the Hang Seng Index was not playing along, down 1% to almost cross below the 25000 point level.
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 breakout play here with support at the 24000 point level as the springboard:
Japanese stock markets saw a rebound on the GDP print with the Nikkei 225 up more than 1.7% to 43378 points.
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 dd well in the final session of the trading week with the ASX200 lifting more than 0.7% to close at 8938 points. SPI futures however are looking to claw most of that back on the open due to the poor lead from Wall Street on Friday.
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 continued to rise as confidence returned across the continent with the Eurostoxx 50 Index closing 0.8% higher on Fridagy night to finish at 5448 points.
Weekly support hadn’t moved in a few months but has now been decisively breached, with the market unable to push any further above the pre “Liberation Day” highs. There could be daylight below but momentum was quite oversold so this might be overdone as this rebound shows a complete fill:
Wall Street however was unable to eke out new record highs again with the NASDAQ down 0.4% while the S&P500 finished 0.3% lower at 6449 points.
The daily chart still looks like a stairway to heaven with the 6500 point barrier coming up very fast again as short term momentum remains overbought:
Currency markets have been against USD all last week following a succession of poor US domestic economic prints with the latest inflation prints actually absorbed by the majors as “King Dollar” wasn’t able to regain strength. Euro and Pound Sterling were pushed higher by the end of the week with the former retaining its strength above the 1.17 handle proper on Friday night.
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 had been getting pushed down on temporary Yen weakness following the Japan/US trade “deal” and USD weakness around the CPI print, but Yen strength on domestic economic growth saw Yen lift again sending the pair back towards the 147 level.
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 was largely unchanged by the recent but well expected RBA cut last week where it held above the 65 handle but was pushed around by the US CPI and PPI prints although again these had marginal impacts with a finish just above the 65 cent level on Friday night.
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, with weekly support about to be taken out.
Oil markets tried better to stabilise through last week but Brent crude remains stuck at the $66USD per barrel level after recently making new weekly lows, lacking any upside momentum.
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 a lot more support in the short term:
Gold is still failing to revive its recent bounceback as it holds well below the $3400USD per ounce level, largely unchanged by the CPI and PPI print as it closes around the $3330 level on Friday night to hold at a new weekly low.
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!