With Wall Street closed for the potentially last ever 4th of July Independence Day holiday, all eyes were on Brexit-land where it looks like Labour has won in a landslide against the Tories. There was some USD selling in anticipation of tonight’s all important US NFP unemployment print, but not much other volatility around bond and commodity markets. Euro continued to move higher with the Australian dollar also extending above the 67 cent level.
US bond markets were closed while oil prices made small advances with Brent crude pushing above the $87USD per barrel level to extend its new weekly high. Gold held onto its recent breakout alongside other undollars after being relatively weak after recently breaking down below the $2300USD per ounce level as it finished well above the $2350 level overnight.
Looking at markets from yesterday’s session in Asia, where mainland Chinese share markets are failing to make a comeback with the Shanghai Composite again rejecting the 3000 point barrier, closing more than 0.8% lower while the Hang Seng Index is barely 0.2% higher at 18028 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 still taking some heat out of the market although there are signs it may be over as the falling wedge pattern is starting to complete:
Meanwhile Japanese stock markets were still lifting stronger with the Nikkei 225 up more than 0.8% to 40913 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 finally were not the worst performers with the ASX200 gaining over 1% to 7831 points.
SPI futures are off only slightly due to the lack of lead from a closed 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 again stayed to the upside overnight across the continent and even Brexitland with the Eurostoxx 50 Index closing 0.4% higher at 4987 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 was closed for their last Independence Day holiday with S&P500 futures slightly muted as a result.
The four hourly chart showed resistance overhead that had been tested last Friday before an early week slump that has now been tested and broken through overnight, helped alongside a soaring NASDAQ. Momentum is nicely overbought now with the potential for more upside here:
Currency markets are coming back against a dominant USD in the wake of a slew of weaker than expected economic releases with most undollars extending their gains overnight in the absence of American traders at their desks. Euro continues to move higher, pushing through the 1.08 handle and making a new weekly high in the process.
The union currency had previously bottomed out at the 1.07 level before gapping higher earlier this week post the US Presidential debate with more momentum now building to the upside with the 1.0750 mid level to act as support going forward:
The USDJPY pair is slowly coming back to short term support and almost the start of week position, heading to just above the 161 handle overnight and taking out all short term positive 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 is making further gains after breaking out of its holding pattern as the USD fell back, extending above the 67 cent handle overnight.
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. This move looks much more convincing with the potential to go higher as speculation of a rate hike in August building:
Oil markets are well out of correction mode with Brent crude lifting slightly higher again with a new daily and weekly 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 on to its breakout overnight, almost matching the June highs slightly above the $2350USD per ounce level.
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:
