A huge fill in the US trade deficit overnight gave the USD some more power, while the latest US initial jobless claims suggest another weaker NFP print tonight that should encompass post shutdown data. Wall Street stumbled around however as did European stocks with oil putting in a surprise breakout, most likely due to protests in Iran. Euro remains under a lot of pressure while some came off the Canadian Loonie as the Canadian trade figures were better than expected while the Australian dollar has slipped to just below the 67 cent level.
Looking at stock markets from Asia from yesterday’s session, where Chinese share markets are a bit wobbly going into the afternoon session with the Shanghai Composite down slightly but still above 4000 points while the Hang Seng Index has fallen back significantly down more than 1.5% to 26149 points.
The daily chart of the Hang Seng Index showed a lot of wish washy action around the 26000 point level in the last couple of months with some recent weakness now turning into strength. The latest small bounce off support does not have a lot of momentum:
Japanese stock markets are also seeing a selloff after recent exuberance with the Nikkei 225 losing 1.6% to almost crack below the 51000 point level.
Daily price action wavered a little during the BOJ hike in the previous weeks but has firmed up strongly with the 50000 point level forming key support although it has gotten ahead of itself here with a small pullback in recent days against longer term overhead resistance:
Australian stocks were the standout again with the ASX200 lifting nearly 0.3% higher to 8720 points. SPI futures are up nearly 0.5% despite the poor showing on Wall Street overnight.
The daily chart pattern shows that short term support has been reinforced after a period of hesitation before Christmas with a bounceback above resistance at the 8800 point area still possible:
European markets were unable to close in positive territory overnight although there was a mix of good and bad across the continent as the Eurostoxx 50 Index closed 0.3% lower at 5904 points.
The market had been failing to make headway in recent months due to the too high valuations but short term support was very solid and has pushed well above recent highs to start 2026 with some gusto as a new breakout accelerates:
Wall Street also failed to move higher across the board with the NASDAQ dropping back 0.4% while the S&P500 put in a scratch session to finish at 6921 points.
The daily chart showed a belated Santa rally that took back some of the gains to match the November highs but it still looking well supported on the four hourly chart below with the potential to lift up towards the 7000 point level next:
Currency markets were in a holding pattern due to the looming break over the New Year but are failing to move against King Dollar as traders anticipate an interesting NFP print on Friday, with last nights trade deficit numbers giving USD a little more of a kick. Euro was on the backfoot again overnight pushed well below the 1.17 handle following Pound Sterling.
The union currency was pushed down to the 1.17 handle during the Xmas period and after a small bounceback is playing like a dead cat bounce here as the end of NATO looms on the horizon. Watch for a break below the recent lows:
The USDJPY pair pushed well above the 157 handle on the new year sessions but since gave it all back and remains somewhat in the doldrums although it pushed towards that level again 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. Watch for any break below the 156 handle closely next:
The Australian dollar was weakening throughout the pre NY period but found support at the mid 66 level where it has broken out on commodity volatility but has weakened slightly down to the 67 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 short term support is shoring up again:
Oil markets have been on a multi week/monthly downtrend prior to the Venezuelan invasion with not much upside thereafter, although Brent crude shot up above the $62USD per barrel overnight, but probably on the Iranian protests and smaller US trade deficit.
The daily chart pattern shows an extended downtrend that is coming under threat but watch for this to potentiate out as a false break:
Gold had been using the $4300USD per ounce level as strong support throughout the NY/Xmas period and made a comeback on USD weakness as it again tried to break out above the $4500USD per ounce level overnight.
As I previously mentioned that after some stability, another large upside potential move was looming again for the shiny metal as the desire for USD dwindles and here we are, albeit very overbought as short term resistance forms slightly:
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!