Wall Street bounced back overnight on the latest initial jobless claims numbers were better than expected with the good news helping alleviate stress on risk markets. European shares were less sanguine however and failed to advance. USD was largely unchanged on the print as other macro concerns individually pushed the major currency pairs around with Euro steady while Yen also stopped weakening. The Australian dollar also continued to firm post the RBA hold decision as it tried again to get its way up through the 66 cent level.
10 year Treasury yields were again on the rise, but only lifted a handful of points to almost extend above the 4% level while oil prices lifted again with Brent crude almost lifting up through the $78USD per barrel level. After previously being unable to get back above the $2400USD per ounce level, gold prices have bounced back strongly, closing at the $2420 level.
Looking at markets from yesterday’s session in Asia, where Chinese share markets are putting in a little lift higher as the Shanghai Composite moves up 0.2% while the Hang Seng Index was up nearly 0.7% but finished flat at 16895 points.
The Hang Seng Index daily chart was starting to look more optimistic a few months back but price action has slid down from the 19000 point level and continues to deflate in a series of steps as the Chinese economy slows. A few false breakouts have all reversed course and another downside move is looming here as the 17000 point level is broken:
Meanwhile Japanese stock markets were reducing in volatility slipped going into the close with the Nikkei 225 down some 0.7% to 34831 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 support subsequently broke on that retracement, and then the front fell off. Futures are indicating a somewhat steadier session to end the trading week but Yen volatility is still dragging this around:
Australian stocks are pulling back once again with the ASX200 down 0.3% to 7681 points.
SPI futures however are up 1% due to the bounce on Wall Street from overnight so we’re likely to see a stronger finish to the trading week in today’s session. Former medium term support at the 7700 point level will remain under pressure here as trader’s absorb the RBA’s signalling of no punchbowl for the rest of 2024, but short term momentum looks more positive:
European markets stabilised further but failed to move higher across the continent, with the Eurostoxx 50 Index finishing flat at 4668 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 just unable to breach the 5000 point barrier. Instead, former ATR support at the 4900 point level was only a temporary anchor point as we go deep down into correction territory. Price must clear the 4700 local resistance level smartly to get out of trouble:
Wall Street however was able to follow through on its bounce back with the NASDAQ surging more than 2% higher while the S&P500 also closed more than 2.3% higher to 5317 points.
The four hourly chart illustrates this bounceback is only a smidgen under short term resistance at the mid 5300 point level with momentum retracing from being oversold and now broadyly positive. The potential for a positive breakout is building here:
Currency markets were able to provide some stability overnight as good news was accepted as good news for a change with the USD largely unchanged against most of the majors in the wake of the initial jobless claims print. Euro held fire just above the 1.09 level as a result.
The union currency had previously bottomed out at the 1.07 level before gapping higher earlier in the week with more momentum building to the upside with the 1.0750 mid level as support but there was still too much pressure from King Dollar. This recovery about ATR support could still be unsustainable however so watch for this minor retracement to possibly gain momentum if support doesn’t hold at the 1.09 level:
The USDJPY remains on a downwards medium term pattern as the carry trade unwinds but this bounceback is holding at the 147 level with the potential to extend further as short term momentum builds.
The overall volatility speaks volumes as it pushed aside the 158 level as longer term resistance in the weeks leading up to the BOJ rate hike. Momentum is suggesting a possible bottom is brewing but this maybe just catching knives at this point:
The Australian dollar is no longer just holding in the wake of the RBA signalling no rate cuts for the rest of 2024 as it lifts above the 65 cent level with another push up towards the 66 cent level overnight.
During June the Pacific Peso hadn’t been able to take advantage of any USD weakness with momentum barely in the positive zone but that has changed in recent weeks with price action finally getting out of the mid 66 cent level that acted as a point of control. My view of a weak resurgence is morphing slowly into a stronger move higher here:
Oil markets remain in a weak position despite the looming Iran/Israel war and managed to bounce back a little more overnight with Brent crude pushing towards but not above the $78USD per barrel level in what could be a bottoming action.
After breaking out above the $83 level last month, price action had stalled above the $90 level awaiting new breakouts as daily momentum waned and then retraced back to neutral settings. Daily ATR support had been broken with short term momentum still in oversold mode but watch for a potential follow through on this reversal as this swings into higher volatility:
Gold was finding it tough to get back above the $2400USD per ounce level after failing to clear key resistance at the $2450 level last Friday night with price action pausing and slowly turning into a classic falling bullish wedge pattern yesterday. It subsequently broke out overnight to return to the start of week position at the $2430 level.
While it was the biggest casualty of the reaction to the recent US jobs report, the shiny metal was able to clock up some gains before this reversal, almost hitting the $2500USD per ounce level. The longer term support at the $2300 level remains key and while this looks like a good opportunity to buy the dip there is the potential for more downside here if short term support evaporates:
