A light economic calendar overnight highlighted the bifurcation in risk taking again with Wall Street making new highs while European stocks faltered on political turmoil across the continent. A surprisingly strong US Treasury bid kept the USD strong against the majors with Euro falling back yet again while the Australian dollar can’t get itself out of its post NFP print funk, hovering at or below the 66 cent level.
10 year Treasury yields were down on the auctions to retrace below the 4.4% level while oil prices climbed slightly higher with Brent crude finishing just above the $82USD per barrel level. Gold however remains under the pump, only managing a small relief bounce overnight to remain slightly above the $2300USD per ounce level.
Looking at markets from yesterday’s session in Asia, where mainland Chinese share markets started in the red and have stayed their at the close with the Shanghai Composite off by more than 0.7% while the Hang Seng Index returned from its long weekend with another poor session, closing 1% lower to 18176 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 were the only bright note with the Nikkei 225 up 0.2% to 39134 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 although futures are indicating a small drop on the open:
Australian stocks slumped after returning from the long weekend, with the ASX200 closing more than 1.3% lower to 7755 points.
SPI futures are down again, off by at least 0.5% despite the solid rise 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 in mid April. 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, but resistance overhead beckons:
European markets continue to stumble amid political uncertainty with losses across the continent with the Eurostoxx 50 Index closing 1% lower to 4965 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. Watch ATR support carefully here:
Wall Street however continues to rise to new record highs as the NASDAQ led the way, up nearly 0.9% while the S&P500 gained nearly 0.3% to continue advancing past the 5300 point level, closing at 5375 points.
The four hourly chart showed the Friday night rebound coming up against a lot of hesitation at the 5300 point level with short term momentum ready to launch higher. This consolidation phase has now turned into a small breakout with the 5400 point level the next target:
Currency markets remain in the thrall of USD following Friday night’s US job numbers with the major currency pairs still looking quite depressed despite a mid session attempt at reversing the trend on the back of strong Treasury auctions. Euro is still leading the way, unable to recover above the 1.08 handle with its gap down over the weekend deepening.
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 before this flummoxing back to the 1.08 handle again:
The USDJPY pair was able to hold on to its post NFP gains, continuing its post weekend trend higher but some late volatility saw it finish just above the 157 handle early this morning.
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. Overall this is not yet exciting enough as monthly resistance looms at the 158 level:
The Australian dollar is in a weak holding pattern after the usual weekend gap with the return of local traders to their desks unable to bid higher following a swift breakdown in reaction to the US jobs print on Friday night at the 66 cent level.
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 breakdown does not bode well for the rest of the month:
Oil markets are trying hard to get out of correction mode with Brent crude lifting again overnight to break above the $82USD per barrel level after previously dropping down the $76 level last week amid 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 negative:
Gold continued its very mild uptick from its weekend break to steadily build back above the $2300USD per ounce level, but is still looking incredibly weak here.
The biggest casualty of the US jobs report on Friday night, the shiny metal is still at a weekly low with short term momentum quite negative so watch for another potential rollover here:
