The latest ISM Manufacturing survey came in much weaker than expected, sending the USD down against the major currency pairs while Wall Street managed to continue its rebound from Friday night. European shares played catchup overnight with most stock futures looking optimistic for the open here in Asia today. The drop in USD has seen Euro make a new monthly high above the 1.09 level while the Australian dollar almost broke through the 67 cent level.
10 year Treasury yields fell sharply and lost more than 11 points to retrace below the 4.3% level while oil prices suffered further as well with Brent crude breaking down to the $78USD per barrel level. Gold was able to rebound on the weak USD however, shifting up through the $2350USD per ounce level.
Looking at markets from yesterday’s session in Asia, where mainland Chinese share markets were again up initially but slid into negative territory at the close with the Shanghai Composite down 0.1% while the Hang Seng Index was up slightly, closing 0.2% higher at 18271 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:
Meanwhile Japanese stock markets were able to put in a very solid rebound, with the Nikkei 225 up more than 1.1% to 38487 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 and futures indicating another solid rebound:
Australian stocks also had a solid session to finish the week with the ASX200 up nearly 1% to 7701 points.
SPI futures are up nearly 0.5% due to the rebound in industrial stocks on Wall Street 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. Momentum is finally getting out of its oversold condition but is still technically negative so I’m wary of what looks like a dead cat bounce:
European markets continued to pause their recent reversal with scratch sessions across the continent with the Eurostoxx 50 Index closing dead flat at 4982 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 is still looking to turn into a larger breakout with support at the 4900 point level quite firm but resistance has proven too strong overhead:
Wall Street was again looking to be dragged down by tech stocks, but industrials came to the fore with the Dow and S&P500 rebounding strongly, the latter gaining more than 0.8% to almost get back above the 5300 point level, finishing the trading week at 5277 points.
The daily chart was showing a large move higher as all Fed roadblocks seemingly were cleared with price action getting well out of its previous slightly stalled position above the 5200 point area. However the four hourly chart was showing a lot of hesitation here at the 5300 point level sliding down into support just above the 5200 point area, which proved a very solid base from which to make this short term momentum rebound:
Currency markets were witnessing a much firmer USD but internal markers in the latest US GDP print and then the PCE print saw King Dollar lose ground sharply after the release, before coming back slightly later in the session, with Euro rebounding back to its early week high just below the 1.09 handle.
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. Medium term support was briefly tested at the 1.08 level with momentum rebounding back into the positive zone, but not quite overbought yet:
The USDJPY pair was able to advance slightly on the session and made a new weekly high as it steadied somewhat just above the 157 level after looking positive before the recent consumer confidence print.
This price action post the epic BOJ meeting volatility was much more welcome but this reversal is not that surprising given the weakness of the USD. ATR support at the mid 156 handle continues to be defended but only just as short term momentum inverts:
The Australian dollar has been in whipsaw mode for over a week now and had already bounced before the core inflation print with a move that almost matched the early week intrasession high, but failed to make it stick later in the session, finishing right on the mid 66 cent level.
The Aussie has been under medium and long term pressure for sometime before the recent RBA and Fed meetings and while there was optimism in the last couple of weeks, resistance at 67 cents was too high to breach. I still reckon the 66 handle will break soon as successive levels of resistance continue to ramp down:
Oil markets are failing to get back on track as the trend remains down since the late March highs with Brent crude unable to make good on its recent breakout, almost retracing below the $81USD per barrel level on Friday night for a new weekly low.
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:
Gold is still failing to get back on trend as well as the USD remains too strong with a small retracement on Friday night as it moves further towards the $2300USD per ounce level for a new weekly low.
Short term momentum has retraced out of oversold mode but remains negative with the mid week rebound failing to gain traction as price action on the daily chart shows a rounding top that could reverse further lower: