Friday night saw the release of the latest US PPI print and unlike the lower than expected CPI print in the previous session, this one came in hotter than expected, with US markets not as ebullient as the rest of the risk complex. The USD was initially higher on the print and then retraced alongside yields with Pound Sterling the strongest alongside Euro while Yen remains somewhat weak. The Australian dollar remains somewhat firm in comparison as it holds above the 67 cent level to stay at its near six month new high.
US bond markets saw some volatility although as 10 year Treasuries only dropped slightly below the 4.2% level they have fallen nearly 10 points this week. Oil prices stabilised somewhat on OPEC machinations with Brent crude sticking around the $85USD per barrel level while gold prices dipped below the $2400USD per ounce level before bouncing back as the USD retraced.
Looking at markets from Friday’s session in Asia, where mainland Chinese share markets started higher but couldn’t manage to hold on to their gains with the Shanghai Composite closing flat at 2971 points while the Hang Seng Index soared much higher, lifting some 2.5% higher to finish at 18293 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 went completely the other way, with the Nikkei 225 falling more than 2% lower to 41190 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 price action now pushing right through resistance at the 39000 point level with momentum very overbought as this breakout gets going, with futures are indicating a pullback on the open as Yen lifts appreciably:
Australian stocks however kept rising with the ASX200 wanting to get up through the 8000 point level, closing some 0.8% higher to 7959 points.
SPI futures however are up a solid 0.6% due to the higher moves from Wall Street from 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 now well out of its oversold condition with a breach of the 8000 point level possibly on the cards:
European markets maintained their positive mood with further gains across the continent as the Eurostoxx 50 Index closed more than 1.3% higher to cross the 5000 point level, finishing at 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. Former ATR support at the 4900 point level looks like the anchor point and so far has held here:
Wall Street continues to be supported by tech stocks in the main with a solid Friday night session with the NASDAQ and the S&P500 closing around 0.6% higher, the latter finishing at 5615 points for a new record high.
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 was somewhat overbought but has retraced slightly so we could see a slightly volatile start to the trading week tonight if further earnings disappoint:
Currency markets had been coming back against a dominant USD well before the dual CPI and PPI prints with almost all the undollars performing well except Kiwi. Euro remains strong alongside Pound Sterling to expand its three weekly high in the process.
The union currency had previously bottomed out at the 1.07 level before gapping higher earlier in the 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 still looks dire here on the potential BOJ intervention that has seen a thumping in Yen before the PPI print with a 400 pip downside move from the 161 handle to just below the 158 level, which has been confirmed on Friday night.
This volatility speaks volumes as it once pushed aside the 158 level as longer term resistance, but then was unable to breach the 162 level as it looks like the BOJ intervention finally worked on the ever weakening Yen:
The Australian dollar is now making gains after breaking out of its holding pattern as the USD fell back, remaining well supported above the 67 cent handle from Friday night at a new six month high as sentiment shifts more towards the RBA raising as the RBNZ looks like cutting.
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. 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 could come under pressure:
Oil markets are trying to stabilise after getting out of correction mode with Brent crude steady but not advancing at the $85USD per barrel level on Friday night.
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 retracing out of overbought mode:
Gold is still trying to hold on to its breakout from late last week and its post CPI breakout and has held above the $2400USD per ounce level to make a new high with support seemingly strong at that level.
While it was the biggest casualty of the reaction to the US jobs report, the shiny metal had consistent negative short term momentum that has now turned around with upside resistance at the $2400 level finally broken. The longer term support at the $2300 level was key so this should support further gains if the USD remains weak:
