Friday night saw the release of the latest and all important US NFP unemployment print, which in the end surprised to the upside but had a lot of troubling internal markers. This sent Wall Street higher but pushed the USD and bonds further lower with Euro putting in a new three week high while the Australian dollar extended well above the 67 cent level for a near six month new high.
US bond markets reopened with a consistent drop across the yield curve as 10 year Treasuries pulled back to the 4.28% level closed while oil prices made small advances with Brent crude pushing above the $87USD per barrel level to extend its new weekly high. Gold not only held onto its recent breakout but pushed itself higher as well, almost cracking the $2400USD per ounce level for a near full recovery.
Looking at markets from Friday’s session in Asia, where mainland Chinese share markets fell sharply at first before recovering somewhat with the Shanghai Composite closing 0.3% lower while the Hang Seng Index was off by more than 1.2% to 17799 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 retraced slightly before finishing with a scratch session as the Nikkei 225 closed at 40912 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 slid back slightly with the ASX200 losing just over 0.2% to 7812 points.
SPI futures are off only slightly despite the very solid lead from a buoyant Wall Street on 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 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 couldn’t hold on to their nascent gains with small pullbacks across the continent with the Eurostoxx 50 Index closing 0.1% lower at 4979 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 reopened from their mid week holiday to absorb the latest NFP print and eventually closed much higher with the NASDAQ up 0.9% for another record high with the S&P500 up nearly 0.6% to closed at 5567 points.
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, helped alongside a soaring NASDAQ. Momentum is nicely overbought now with the potential for more upside here:
Currency markets had been coming back against a dominant USD well before the latest NFP print and the release seemed to confirm the new trend with all the undollars performing. Euro continues to move higher, extending well above the 1.08 handle and making a new three 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 however is trying to find some support after retracing all of its gains for the week, heading back below the 161 handle on Friday night and looking to firm at the mid 160 level.
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, but could it return there on this new USD weakening trend as the BOJ tries to intervene on the ever weakening Yen:
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 on Friday night to a new six month high.
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 in the previous session before the NFP print after matching the June highs above the $2350USD per ounce level and then zoomed nearly $40 higher to almost breach the $2400 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:
