The much anticipated US CPI print came and went overnight and while it came in slightly lower, sending USD down considerably against nearly everything, the post conference by Fed Chair Powell dampened expectations of more than one rate cut by the end of the year. European stocks rebounded after nearly a week of selling while Wall Street loved the print to make a new record high again. The Australian dollar was one of the better undollars on the night, launching more than 100 pips higher to get back above the 67 cent level.
10 year Treasury yields retraced yet again, falling 7 points to well below the 4.4% level while oil prices climbed slightly higher with Brent crude finishing just above the $82USD per barrel level. Gold is trying to get back on trend but had the poorest reaction to the CPI print, barely moving higher above the $2300USD per ounce level.
Looking at markets from yesterday’s session in Asia, where mainland Chinese share markets looked hesitant but slowly building in confidence near the close with the Shanghai Composite up by 0.3% while the Hang Seng Index is continuing its breakdown, down more than 1.3% to 17911 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 retraced their recent gains with the Nikkei 225 down more than 0.6% to 38876 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 lift on the open:
Australian stocks have continued their slump with the ASX200 down nearly 0.5% to 7711 points.
SPI futures however are up at least 0.7% on the strong moves overnight on Wall Street but may face headwinds with today’s unemployment print. 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 finally found some mojo after stumbling amid political uncertainty with gains across the continent with the Eurostoxx 50 Index closing 1.4% higher to 5034 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 which has been defended so far:
Wall Street loved the lower than expected CPI print, not so much the Fedspeak thereafter but still managed some solid gains with the NASDAQ up 1.5% while the S&P500 gained over 0.8% to break past the 5400 point level.
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. The consolidation phase with a small breakout now has legs as the 5400 point target level is swept away:
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 still trying hard to get out of correction mode with Brent crude lifting again overnight to stay slightly 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 only had a mild rebound on the CPI print with a lift up towards the mid $2300USD per ounce level, but was unable to make it stick, still looking quite weak here.
Still the biggest casualty of the US jobs report on Friday night, the shiny metal has bouncd off its weekly low with short term momentum now neutral but not yet clearing short term ATR resistance overhead:
