A series of potentially good economic reports overnight gave more upside to equities while currency markets saw a broad return to strength in USD with European CPI moderating. European markets lifted the most while Wall Street put in solid returns which should translate into a more positive mood here in Asia.
The USD put Euro back in its place while the Australian dollar was pushed down towards the 63 cent level again.
US bond markets saw some minor movements and range trading in yields with 10 year Treasuries eventually settling again at the 4.8% level. Meanwhile oil prices continued to selloff, with Brent crude falling back to the $85USD per barrel level. Gold remained relatively strong but is struggling to get back above the $2000USD per ounce level.
Looking at share markets in Asia from yesterday’s session where mainland Chinese share markets were unsteady again with the Shanghai Composite losing 0.1% to close at 3018 points while in Hong Kong the Hang Seng Index lost its nerve and sold off, losing more than 1.5% to close at 17112 points.
The daily chart is still showing a significant downtrend that has gone below the May/June lows with the 19000 point support level a distant memory as medium term price action stays well below the dominant downtrend (sloping higher black line) following the previous month long consolidation. Daily momentum readings are trying to get out of oversold mode and price is now well below recent support levels, so watch out below:
Japanese stock markets were able to reverse slightly with the Nikkei 225 closing some 0.5% higher at 30858 points.
Trailing ATR daily resistance was coming under threat in a very fast bounceback and while daily momentum retraced back from oversold settings as price action is following Chinese markets with a typical dead cat bounce pattern forming here. Futures are indicating a solid move higher as Yen sold off appreciably overnight, but I’m still watching for a return to the previous monthly low at 30000 points proper:
Australian stocks were unable to advance with only a small lift again as the ASX200 closed just 0.1% higher at 6780 points, with the break below at 7000 points from last trading week a distant memory.
With some relief across the risk complex, SPI futures are up 0.5% so we should see the 6800 point support level firm on the open this morning with the 7000 point level still remaining as strong short and medium term resistance. The daily chart is not looking optimistic here with medium term price action continuing to move sideways at best, down the hill at worst:
European markets are doing somewhat better to get out of their funk with the Eurostoxx 50 Index eventually gaining some 0.8% to finish at 4061 points.
The daily chart shows an overall decline with weekly support at 4100 points no longer defended, as weekly resistance firms at the 4300 point resistance level. There were signs the previous little bounce was running out of steam as daily momentum remained neutral at best, with a rebound out of oversold settings possibly setting up a small bounce higher:
Wall Street built on its previous positive momentum with lifts across all three bourses as the NASDAQ gained 0.5% while the S&P500 put on 0.6% to finish at 4193 points.
The daily chart is still showing a clear downtrend with a series of lower weekly lows with yet another one created on Friday. Short term momentum is now getting out of oversold territory as price action wants to bounce off of this new low, with the potential swing trade here about to testing trailing ATR support at the 4200 point level:
Currency markets remain highly volatile with the latest US wage data and Eurozone CPI pushing USD higher with Euro slammed back down from its recent intraweek high.
On the four hourly chart the union currency had finally broke through short/medium term resistance at the 1.06 handle at the start of the week, pushing short term momentum to extremely overbought levels but this was reversed sharply to crack below that level. Support at the recent weekly lows around the 1.05 level is going to be tested here:
The USDJPY pair had the biggest swing overnight after failing to remain in its previous holding pattern and bouncing off the 149 level with a stunning 200 pip move straight up to the 151 handle instead.
Four hourly momentum is again very stretched to extreme overbought settings so watch for a potential pullback here:
The Australian dollar remains in a whipsaw move from week to week with yet another failure to break above recent highs, rejecting the 64 handle and pulling back to the low 63’s on the strong USD move overnight.
The Pacific Peso remains under medium and long term pressure with price action just not being translated into anything sustainable as the four hourly chart shows the potential to drop lower but I think traders are awaiting next week’s RBA meeting:
Oil markets remain volatile in the wake of growing conflict in the Middle East with a follow through of the recent reversal, with Brent crude falling further, now down to the $85USD per barrel level as it remains able to shake off a series of lower daily highs since the mid September levels.
After almost reaching $100 in mid September, price was looking to return to the August levels around the $85 area where a point of control had been established before the recent breakout. Daily momentum is still at negative settings with a retest of support at the August level likely again:
Despite the reversal in USD, gold remains the best undollar by holding on to its strong position after finally breaking through the $2000USD per ounce level, listing downwards this morning to just over $1983.
The daily chart showed quite a steep uptrend since the previous weekend gap higher as momentum remained very positive in the short term, trying to get back up to the $2000 level. This new breakout puts in a new monthly high with daily momentum again looking overbought and ripe for a pullback back to retest the $1900 level, but the bugs are fully in charge here for another attempt at the all time record high. Watch ATR support on the four hourly chart though:
