Overnight saw the release of the “official” US CPI print for December, and while the outcome was softer than expected risk markets were more wary of the continued political pressure on the Fed from the Trump regime and the burgeoning US government debt levels. Some earnings reports on Wall Street gave pause to the actual underlying economic strength in the US economy, while the USD itself rallied against most of the major currency pairs. Oil prices continue to spike on the Iranian situation while precious metals took a very small breather as Bitcoin rumbled back to life. The Australian dollar reversed course sharply to get back below the 67 cent level.
Looking at stock markets from Asia from yesterday’s session, where mainland Chinese share markets stalled out in the afternoon session with the Shanghai Composite down more than 0.6% at the close while the Hang Seng Index closed up nearly 1% higher to 26848 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 have more momentum brewing but is facing resistance overhead:
Japanese stock markets reopened after the long weekend with a big leap higher, as the Nikkei 225 lifted more than 3% to stay above the 53000 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. This looks like a launch point through longer term overhead resistance:
Australian stocks are also in the green as the ASX200 closes nearly 0.8% higher at 8826 points. SPI futures however are flat on the poor lead from 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 a bit mixed overnight with some pushing and shoving across the continent as the Eurostoxx 50 Index closed just 0.2% higher at 6029 points, still keeping the recent rally going.
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 however failed to move higher across the board with the NASDAQ down nearly 0.2% while the S&P500 lost nearly 0.5% to close at 6946 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 somewhat supported on the four hourly chart below with the potential to lift up towards the 7000 point level next:
Currency markets have failed to reverse their move against King Dollar as the December NFP print came to pass on Friday, but are now pivoting on the attack on the Fed by the Trump regime. The USD reversed course briefly again overnight but Euro continued its slide to end up below the mid 1.16 level alongside other poor returns from Pound Sterling, Canadian Loonie and the Kiwi dollar.
The union currency had already been pushed down to the 1.17 handle during the Xmas period and after a small bounceback put on a dead cat bounce here as the end of NATO looms on the horizon. Watch for a break below the recent lows at the 1.16 level next:
The USDJPY pair pushed well above the 157 handle on the new year sessions, gave it all back and then accelerated higher again despite stronger inflation in Japan with a move above the 159 level overnight showing no signs of stopping despite jawboning from Japanese officials.
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. This is now definitely overbought but has more upside potential:
The Australian dollar was pushed down to the 67 handle on the NFP print on Friday night before a small bounce like all the other undollars on the Powell putdown but has since reversed this overnight, heading back below this key level as of this morning.
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 barely shoring up again so I don’t see a lot of upside here:
Oil markets have been on a multi week/monthly downtrend prior to the Venezuelan invasion with not much upside thereafter, but things are brewing as Brent crude shot up above the $65USD per barrel overnight on the Iranian revolts.
The daily chart pattern shows an extended downtrend that is now well under threat and broken in the short term so watch for this to potentially turn into a proper reversal although it is well over extended in the short term:
Gold has made a serious comeback on USD volatility with a continued breakout above the $4500USD per ounce level on Friday night as it breached the $4600 level on the Powell putdown before settling down overnight somewhat.
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!