Overnight markets reflected the poor start to the trading week here in Asia with Wall Street eking out a new high but only barely as European markets continued to digest the French election results. The usual post NFP light economic calendar gave currency traders no ammunition to push the majors around with the USD starting where it finished although the Australian dollar retraced slightly after the weekend gap down to just above the 67 cent level to hold on to its near six month new high.
US bond markets were flat as 10 year Treasuries stayed around the 4.28% level closed while oil prices made small losses on lower demand with Brent crude pushed down to the $85USD per barrel level to give up its new weekly high. Gold was the biggest casualty on news China ceased its recent buying, falling back to the $2350USD per ounce level after recently making a near full recovery.
Looking at markets from yesterday’s session in Asia, where mainland Chinese share markets are falling sharply again with the Shanghai Composite off by nearly 1% while the Hang Seng Index is down nearly 2% to 17555 points as the bears circle.
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 are retracing slightly on Yen concerns with the Nikkei 225 down 0.2% or so to 40780 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 are also losing ground with the ASX200 falling just over 0.6% to 7763 points.
SPI futures are up 0.2% despite what looks like a mixed lead from 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 remain in a flux with the Eurostoxx 50 Index closing 0.1% lower at 4969 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 is still absorbing the latest NFP print and getting ready for the next series of earnings reports with the NASDAQ up just 0.2% for another record high with the S&P500 up 0.1% to close at 5572 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, unless earnings disappoint:
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. However the weekend gap has caused some shift in sentiment with Euro pulling back ever so slightly to remain just above the 1.08 handle and holding the three weekly high in the process.
The union currency had previously bottomed out at the 1.07 level before gapping higher earlier this week with more momentum now building to the upside with the 1.0750 mid level to act as support going forward, but watch the low moving average here in the short term to come under pressure:
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 firming somewhat 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 no longer making gains after breaking out of its holding pattern as the USD fell back, remaining above the 67 cent handle from Friday night at a new six month high but possibly putting in a rounding top pattern here.
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, but I’m watching short term support here which is coming under pressure:
Oil markets are trying to stabilise after getting out of correction mode but Brent crude pulled back after the weekend gap after making a new weekly high to return to just above the $85USD 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 was unable to hold on to its breakout from late last week, with a pullback to the $2350USD per ounce level overnight as the weekend gap turned into a retracement after failing to breach teh $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:
