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01.12.22 Macro Morning

By Chris BeckerMarket OverviewDec 01, 2022 10:52
au.investing.com/analysis/011222-macro-morning-200537912
01.12.22 Macro Morning
By Chris Becker   |  Dec 01, 2022 10:52
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Last night was all about the sentiment with Fed Chair Powell pulling back on his hawkish inflation talk – “time to slow the pace” – which was a BUY signal on every part of the risk complex compass! Wall Street launched over 3% higher across the board with futures indicating a big jump ahead for Asian stocks today.  The USD was hit hard against the major currencies with Euro pushed back up to the 1.04 level as the Australian dollar broke out well above the 67 cent level, almost hitting its previous monthly high. Bond markets sold off with 10 year Treasury yields lifting another 5 basis points to the 3.8% level while the commodity complex saw oil prices continue to vacillate but eventually lift higher, with Brent crude nearly back above the $87USD per barrel level while gold followed the undollars to zoom up to the $1768USD per ounce level.

 

Looking at share markets in Asia from yesterday’s session where mainland Chinese share markets put in scratch sessions with the Shanghai Composite closing at the 3151 point level while the Hang Seng Index put in a much stronger effort, closing 2% higher at 18597 points. The daily chart is showing a perfect breakout here with a big surge up towards the 19000 point likely on the open this morning with support heavily defended at the 17000 area:

HSI
HSI

Japanese stock markets remained the laggards with the Nikkei 225 closing 0.2% lower at 27968 points. The inability to decisively clear overhead resistance due to the lack of a clear lead from Wall Street was hampering further gains as the trading week progressed but this is looking much more favorably today with futures indicating a big surge back above the 28000 point area. Price action should get back above the trendline after looking “toppy” recently, and while daily momentum is positive its not yet overbought. Support at the 27500 point level has held so far:

NI225
NI225

Australian stocks were able to finish slightly higher, despite the falls on the previous session Wall Street overnight with the ASX200 finishing up 0.4% to 7284 points. SPI futures are up more than 0.7% flat again due to the huge lead from Wall Street, with the daily chart now looking very bullish indeed! Daily momentum has remained solidly overbought through this uptrend, with strong support below at 7000 points holding steady during any pullback. The beginnings of a bearish rising wedge has been negated with overhead resistance pushed aside – Santa rally here we come:

AUS200
AUS200

European markets stumbled around again on the open but pushed through at the close with more likely to come after the huge rally on Wall Street thereafter, with the Eurostoxx 50 Index closing some 0.7% higher at 3964 points. The daily chart shows key overhead resistance at the 3900 point area having been cleared with daily momentum about to head back into overbought status. This small pause didn’t translate into a drop so here we go Mario:

EUSTX50
EUSTX50

Wall Street got a huge lift overnight on the change in Powell-speak with massive buying across the board, the NASDAQ racing up 4% while the S&P500 put on more than 3% for a new monthly high at 4080 points. The chart picture was looking quite different to other stock markets as it continued to battle many more layers of resistance but this one off move puts that all aside as buyers go all in on the Fed “reversal”. The key 4000 point psychological level should be solid support going forward:

SPX
SPX

Currency markets had the most volatility of all risk markets overnight on the Powell speech, with USD failing to reassert dominance as all the major pairs pushed back against King Dollar. Euro was drifting lower, heading back down to the 1.03 handle but squeezed in a late rally here to get just back above the 1.04 handle. While strong support remains evident at the mid 1.02s this could be one off, with short term momentum not yet positive:

EURUSD
EURUSD

The USDJPY pair had a false breakout before the USD reversal, almost clearing overhead trailing ATR resistance before getting smacked down to the recent lows at just above the 138 handle this morning. This pair is still somewhat out of correlation with risk aversion not leading to Yen selling so watch for a potential breakdown below the 138 handle again:

USDJPY
USDJPY

The Australian dollar continued to have a wild ride this week but this time its all upside with a breakout above the 67 handle and then some, nearly clearly the previous weekly highs at the 68 handle proper. Momentum has now fully re-engaged to the positive zone, bouncing of the previous weekly lows as USD goes down in the night:

AUDUSD
AUDUSD

Oil markets continue the macro battle between bulls and bears at the key monthly support areas for both WTI and Brent crude, but risk sentiment improved the situation overnight, sending the latter back up to the $87USD per barrel level. Daily momentum had been oversold here and possibly setting up a swing trade and this is eventuating in the early stages, although price is not yet above the key high moving average area. Medium term the target remains resistance at the $98 level, but there is scope to return to the September lows at $80 or so:

BRENT
BRENT

Gold had a great night after almost recovering from its recent bull trap getting back to the start of week high and now zooming higher on the Fedspeak, finishing just below the $1770USD per ounce level. This is looking good in the short term with an inverse head and shouders pattern on the four hourly chart, but must be taken into context of an overall strong USD move with no buyers circulating around the $1800 level. Short term momentum is looking grand however, getting back into overbought mode after bouncing off former support at the $1740 level:


XAUUSD
XAUUSD
01.12.22 Macro Morning
 

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