Wall Street made another record high as it continues to bet on a Trump return post the Supreme Court “Presidents are actually omnipotent Kings” ruling with bond markets pulling back slightly on Fed Chair Powell’s comments around disinflation and strong employment numbers. The USD finished higher against most of the majors as a result, although Yen had a small pause while the Australian dollar failed to hold on to its new weekly high to return to the mid 66 cent level.
10 year Treasury yields retraced slightly after their recent post-US debate selloff, pulling back 4 points to below the 4.5% level while oil prices broke out higher with Brent crude pushing above the $87USD per barrel level to extend its new weekly high. Gold lifted slightly and remains relatively weak after recently breaking down below the $2300USD per ounce level but is slowly coming back as it finished just above the $2330 level overnight.
Looking at markets from yesterday’s session in Asia, where mainland Chinese share markets are making a strong comeback with the Shanghai Composite about to break above the 3000 point barrier while the Hang Seng Index has returned from holiday to be up 0.3% at 17769points.
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 are also moving up with the Nikkei 225 closing 1% higher to 40075 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 again the worst performers with the ASX200 losing more than 0.3% to 7723 points.
SPI futures however are up nearly 0.3% in line with the lift on Wall Street overnight. 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 not yet falling in volatility as another reversal saw drops across the continent overnight as it can’t find sustainable positive momentum with the Eurostoxx 50 Index closing 0.5% lower at 4906 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 rallied across the board again with the NASDAQ up 0.8% while the S&P500 lifted over 0.5% to finish at 5509 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 now well out of the negative zone:
Currency markets are still feeling the effects of a dominant USD with King Dollar although overnight Euro was able to come back later in the session on Powell’s comments with a charge above the 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 161 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 now well out of correction mode with Brent crude breaking out again with a new daily high above the $87USD 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 into overbought mode:
Gold held fire again after being 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 as this rebound looks weak so far.
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:
