Wall Street dropped slightly on Friday night alongside mild moves in European stocks with bond markets having all the action at the end of month/quarter/year triple witching. Combined with some political turmoil in the US following the unreal Presidential debate, and elections in France, risk markets are looking very unsteady going into the new financial year. The USD was largely unchanged in the wake of the latest PCE core inflation print with the Australian dollar holding on to its new weekly high just above the mid 66 cent level.
10 year Treasury yields jumped nearly 10 points higher to almost cross the 4.4% level while oil prices were somewhat muted with Brent crude holding steady above the $85USD per barrel level. Gold rolled over slightly and remains relatively weak after recently breaking down below the $2300USD per ounce level as it finished the week just below the $2320 level.
Looking at markets from Friday’s session in Asia, where mainland Chinese share markets made a comeback with the Shanghai Composite up nearly 1% but still below the 3000 point barrier while the Hang Seng Index was up nearly 0.5% to 17797 points.
The Hang Seng Index daily chart was starting to look more optimistic with price action bunching up at the 16000 point level before breaking out in the previous session as it tried to make a run for the end of 2023 highs at 17000 points with the downtrend line broken. Price action was looking way overextended but this retracement is now taking some heat out of the market but needs to stop soon before moving into corrective mode – watch recent session lows to come under pressure:
Meanwhile Japanese stock markets also got back on trend with the Nikkei 225 closing some 0.4% higher to 39497 points.
Price action had been indicating a rounding top on the daily chart with daily momentum retracing away from overbought readings with the breakout last month above the 40000 point level almost in full remission. Short term resistance had been defended with short term price action now rebounding off former support at the 39000 point level with short term momentum still positive as futures are indicating a further breakout on the open:
Australian stocks were the worst performers relatively speaking with the ASX200 putting on just 0.1% to 7768 points.
SPI futures are down 0.4% in line with the falls on Wall Street on Friday night. The daily chart was showing a potential bearish head and shoulders pattern forming with ATR daily support tentatively broken, taking price action back to the February support levels in mid April. Momentum is finally getting out of its oversold condition but has been unable to get back into positive territory with a return to the 7900 point level not yet on the cards:
European markets are reducing a little in volatility but still suffered some mild drops across the continent, as it can’t sustain positive momentum with the Eurostoxx 50 Index closing 0.2% lower at 4894 points.
The daily chart shows price action off trend after breaching the early December 4600 point highs with daily momentum retracing well into an oversold phase. This was looking to turn into a larger breakout with support at the 4900 point level quite firm with resistance still looming at the 5000 point barrier. Former ATR support at the 4900 point level looks like the anchor point here:
Wall Street wasn’t able to finish the week or month on a positive mood with the NASDAQ down 0.7% while the S&P500 fell back nearly 0.4% to finish at 5460 points.
The four hourly chart showed the Friday night rebound coming up against a lot of hesitation at the 5300 point level with short term momentum ready to launch higher. The consolidation phase with a small breakout no longer has much legs as hesitation builds, but momentum is trying to get out of the negative zone:
Currency markets are still feeling the effects of a dominant USD with King Dollar again dominating on Friday but overall markets were little changed as Euro tried to push back with a finish just above the 1.07 level again.
The union currency had previously bottomed out at the 1.07 level at the start of April as medium term price action with a reprieving reversal in price action back towards the 1.09 level before its own inflation print. Upside pressure was starting to build here but momentum is not yet on Euro’s side:
The USDJPY pair was almost able to match its previous session high, staying well above the 160 handle after taking a very short pause amid consistent strong momentum.
Short term momentum had gotten out of oversold condition but was not yet positive with price action suggesting a further pause or rollover here before the print with this move taking the pair back to last week’s finishing point. This volatility speaks volumes as it pushes aside the 158 level as longer term resistance:
The Australian dollar wants to get out of its holding pattern with the help of hotter local inflation but the USD remains a little too strong as it remains contained just below the 67 cent handle again.
So far the Pacific Peso hadn’t been able to take advantage of any USD weakness with momentum barely in the positive zone in recent weeks with price action whipsawing around the mid 66 cent level as a point of control. Watch the 66 handle to come under threat again however as this remains unconvincing:
Oil markets are still trying to get out of correction mode with Brent crude holding at its current daily high just below the $85USD per barrel level.
After breaking out above the $83 level last month, price action has stalled above the $90 level awaiting new breakouts as daily momentum waned and then retraced back to neutral settings. Watch daily ATR support here at the $86 level which is still broken and will likely be resistance for sometime with short term momentum now well out of negative mode:
Gold held fire and was unable to make a new high for the week after a midweek inversion below the key $2300USD per ounce support level, finishing up just above the $2320 level in a fairly lacklustre rebound.
Still the biggest casualty of the reaction to the US jobs report last week, the shiny metal had consistent negative short term momentum with ATR resistance still ratcheting down without any potential upside. I thought this could break even lower but shows that the $2300 level is key support going forward:
