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16.02.24 Macro Morning

Published 16/02/2024, 11:19 am
Updated 09/07/2023, 08:32 pm

While the UK and Japan slip into recession its full steam ahead on Wall Street with a lower USD providing relief. Stocks in Europe rose as well with the latest retail sales data coming in softer than expected in the US alongside lower GDP estimates. The USD fell back to its start of week position with the Australian dollar able to get off the floor and back above the 65 cent level.

10 year Treasury yields range traded to remain below the 4.3% level while oil prices took back their recent losses with Brent crude back above the $83USD per barrel level. Meanwhile gold fought back after being under pressure and closed this morning above the key $2000USD per ounce level.

Looking at share markets in Asia from yesterday’s session where mainland Chinese share markets were closed for the New Year holiday, and will do so all week while in Hong Kong the Hang Seng Index was also closed.

Japanese stock markets surged back on trend yesterday with the Nikkei 225 closing nearly 1.2% higher at 38157 points.

Trailing ATR daily support was never threatened by price action after this bounce went beyond the September highs at the 33000 point level with daily momentum getting back to overbought readings with a significant breakout. A selloff back to ATR support at 32000 points remains unlikely as the November highs are wiped out in this breakout but I’m cautious of a strong pullback here on any volatility:

Australian stocks also did well as the ASX200 finished nearly 0.8% higher, getting back above the 7600 point level to close at 7605 points.

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SPI futures are indicating a very solid start, up nearly 1% due to the continued rebound on Wall Street overnight. The daily chart was looking firmer with the medium term uptrend and short term price action coming together to take out the previous December highs. As I said previously, watching for any continued dip below the low moving average could see a significant pullback but watch ATR support which has been defended so far:

European markets put in another solid session after a mid week pause, with gains across the continent as the Eurostoxx 50 Index eventually finished 0.7% higher at 4743 points.

The daily chart shows price action still on trend after breaching the early December 4600 point highs but daily momentum has now retraced from being well overbought with futures a pullback this evening. There were some hopeful signs this could turn into a larger breakout but markets were overextended but watch for any falls below the low moving average or ATR support proper:

Wall Street pushed its positivity further overnight with a strong session although tech stocks lagged as the NASDAQ gained just 0.3% while the S&P500 bounced nearly 0.6% to extend past above the magical 5000 point level, closing at 5029 points.

Short term momentum has now bounced well out of oversold territory with a classic buy the dip that has taken in back on trend and restoring some confidence. This fill above the 5000 point level proper will now likely exceed the start of week high:

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Currency markets are trying to fight back against USD in the wake of the strong US inflation print with the softer retail sales and initial jobless claims print helping pull back King Dollar overnight. Euro managed another blip higher to get remain well above the 1.07 level but is still below the recent weekly lows.

The union currency had already been at a new weekly low almost below the 1.07 level but this was taken out and then some for a new monthly low, hovering over that level this morning. Short term momentum has retraced out of oversold mode but only barely, with price action well contained below trailing ATR resistance:

The USDJPY pair remains somewhat stable but has retraced below the 150 handle with a minor move below overnight.

This was looking very optimistic as Yen sells off due to BOJ meanderings with momentum now considerably overbought so watch for a short term pullback to the 150 level proper as part of a mid trend consolidation:

The Australian dollar remains under pressure but was able to put in a late bounce sending it through the 65 handle but this could be shortlived as it remains the weakest undollar following the US inflation print.

The Aussie has been under medium and long term pressure for sometime with the latest rally just a relief valve being let off before this realignment back to a strong USD. There were some signs of a breakout here at the 65 level but any possible inversion above trailing ATR resistance is now off the cards:

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Oil markets have been lifting slightly higher before the US CPI print before a minor stepback that was filled last night as Brent crude went back above the $83USD per barrel level.

After retracing down to trailing ATR daily support at the $77 level, price is still above the weekly resistance levels that so far have held from the January false breakout with the short term target the late January highs above $84 still the next target:

Gold is trying hard to get out of it depressed state following the US CPI print with a small rebound overnight that has just gone above the $2000USD per ounce level but well below the daily ascending triangle pattern (red line below).

Daily momentum is still well oversold with short term support at the $2000 level the critical area to watch with a further session highs and a bounce above short term ATR resistance required to get back on trend:

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