The ECB cut rates for the first time since 2019 overnight but it was fully expected with further rate cuts unlikely at this stage, according to ECB President Lagarde. This gave Euro a small push higher and while Eurpeon shares advanced, Wall Street took a pause from its run of record highs as they await the US NFP jobs report tonight. The Australian dollar didn’t move as it remains above the 66 cent level.
10 year Treasury yields were steady to sit just above the 4.2% level while oil prices climbed back with Brent crude finishing just above the $80USD per barrel level in a strong rebound. Gold was able to continue its rebound on the weaker USD, pushing back above the $2370USD per ounce level.
Looking at markets from yesterday’s session in Asia, where mainland Chinese share markets are moving further down following yesterday’s poor PMI survey with the Shanghai Composite off more than 0.5% while the Hang Seng Index managed to lift just 0.2%, closing at 18476 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 are liking the slightly lower Yen with the Nikkei 225 up over 0.6% to 38703 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 but futures indicating a slight pullback on the open:
Australian stocks were the best performers in the region with the ASX200 moving 0.7% higher to 7823 points.
SPI futures are up at least 0.2% despite the scratch sessions 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. Momentum is finally getting out of its oversold condition and now rebounding back into the positive zone with a return to the 7900 point level possible:
European markets like the ECBs words and actions and continued to lift higher across the continent with the Eurostoxx 50 Index closing up 0.6% to 5069 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 finally brushed aside as it breaks the 5000 point barrier:
Wall Street however took a deep breath as they await tonight’s NFP jobs report with both the NASDAQ and the S&P500 putting in scratch sessions with the latter holding on above the 5300 point level, closing at 5352 points.
The four hourly chart showed the Friday night rebound coming up against a lot of hesitation here at the 5300 point level with short term momentum ready to launch higher as it turned into a solid breakout, but not price action is pausing. This is likely a good setup before tonight’s NFP print but be careful if market expectations about what the Fed will do following the ECB cut are not met:
Currency markets are still moving away from USD but not in unison following the weaker ISM print earlier in the week with last night’s ECB meeting giving Euro a little more upside drive but still just below its new monthly high at 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 able to sustain overbought conditions yet:
The USDJPY pair was unable to bounceback in the Asian session yesterday and overnight, eventually finishing just above the mid 155 level as resistance at the 156 handle proper remains too high to overcome.
Short term momentum has gotten out of oversold condition but has not yet gone positive with some tentative price action suggesting a further pause or rollover here:
The Australian dollar was almost able to break the 67 cent level at the start of the week but was again unable to find it overnight despite a strong fill during the Asian session as it finished above the mid 66 cent level following the ECB meeting.
So far the Pacific Peso can’t seem to take advantage of any USD weakness with momentum barely in the positive zone and price action whipsawing around the mid 66 cent level as a point of control. Watch for any breaks above the 67 handle or below the 66.40 cent level:
Oil markets remain in correction mode although Brent crude was able to lift again overnight after breaking below the $81USD per barrel level previously, settling just above the $80 level as it tries to find a bottom amid the market volatility.
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 still quite oversold:
Gold is trying a lot harder now to get back on trend as it bottomed out at the $2300USD per ounce level, furthering its recent breakout above the $2350 level overnight to make a two week high at the $2375 level.
Short term momentum has retraced out of oversold mode and is now properly overbought with price action breaking above trailing ATR resistance with the potential to return to the $2400 level promptly if USD weakness continues:
