Wall Street remained in a hold pattern overnight as everyone awaits the FOMC meeting with a selloff in Treasuries keeping USD somewhat supported, particularly against Yen while European shares also went nowhere. Yesterday’s RBA meeting where a hold was handed down amid hawkish commentary saw a selloff in local stocks and bonds as well with expectations of rate hikes in 2026 building higher, keeping the Australian dollar elevated against its peers overnight, holding well above the 66 cent level against USD.
Looking at stock markets from Asia from yesterday’s session, where mainland Chinese share markets were listless at best with the Shanghai Composite eventually falling 0.4% to finish just above the 3900 point level while the Hang Seng Index continued its recent decline and lost more than 1.3% to 25434 points.
The daily chart of the Hang Seng Index shows a complete fill of the March/April selloff with a resumption of buying above 26000 points as momentum tried to build but failed to push aside resistance. The latest small bounce off support does not have a lot of momentum here so I am wary of a dead cat bounce which is forming here:
Japanese stock markets were the standout but its all relative with the Nikkei 225 gaining just 0.2% to close at 50655 points.
Daily price action was looking extremely keen indeed as daily momentum accelerated after clearing resistance at the 42000 point level with another equity market that looks very stretched. ATR support was broken at the 50000 point level but daily momentum did not get considerably oversold so there might be life here:
Australian stocks did not like the hawkish hold by the RBA with the ASX200 falling nearly 0.5% to close at 8585 points. SPI futures are up however despite an uneasy session on Wall Street overnight.
The daily chart pattern shows that short term support has been abandoned, as momentum builds for a broader selloff but watch for some stability that could turn into a bounceback above the 8600 point area:
European markets again failed to find a solid bid across the continent as the Eurostoxx 50 Index finished some 0.1% lower at 5718 points.
The market has been failing to make headway here due to the too high valuations but short term support was put under a lot of pressure before finding some buyers to stabilise, as this could turn back into a revisit of the recent highs:
Wall Street is still floating along going into this week’s Fed meeting with the NASDAQ lifting slightly while the S&P500 retreated more than 0.1% to close at 6840 points.
The four hourly chart showed a steady if not exciting climb back to recent highs with somewhat firming support but that nascent trendline was broken overnight so watch for ATR support to come under pressure next:
Currency markets had been building further weakness in USD as we await the December Fed meeting but King Dollar is moving back into a slightly stronger setting on Fed and other central bank hawkishness. Euro retracted again to almost break its recent support level at the 1.16 handle while the Canadian dollar saw some stability return.
The union currency was building strength as it climbed above previous ATR resistance at the 1.1580 area and is still looking on trend here although some internal resistance is starting to creep in as it retreats back towards the 1.16 handle:
The USDJPY pair found a floor to bounce off that has now turned into a sharp reversal with Yen selling off despite speculation about BOJ rate hikes which saw it nearly breach the 157 level overnight.
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 and this recent volatility has now repeated this move. This recent bounce back could have legs up to the previous monthly high ranges at the 157 or higher level:
The Australian dollar has been on a tear due to the hot CPI print and the recently weaker USD and this has been reinforced if not pushed higher by yesterday’s hold by the RBA, keeping it above the 66 handle overnight .
Price action was not looking good for the Pacific Peso in the medium term as the interest rate differential squeeze sent it back to the doldrums, but this has inverted as the RBA moves to a much hawkish position. Resistance at the 65 cent area has been pushed aside with a run up through the 66 cent level which has become short term support:
Oil markets have been on a downtrend for many weeks now and weren’t helped overnight by reports on a glut in oil in 2026 – plus very warm winter temperatures across Europe – with Brent crude dropping back down to the $62USD per barrel level.
The daily chart pattern shows the post New Year rally has a distant memory with any potential for a rally up to the $80 level completely dissipating. There is still potential here for a run down to the $60 level next but we haven’t had a new weekly low for awhile so watch for a breakout run here:
Gold is remaining above the key $4200USD per ounce level despite a slightly stronger USD but has gone nowhere since last week with a very small bid overnight keeping above support.
This could be another slightly overdone in the short term ride but then after some more stability, yet another large upside potential move is looming again for the shiny metal as the desire for USD dwindles.
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!