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17.06.24 Macro Morning

Published 17/06/2024, 09:42 am

Friday night saw continued volatility on European markets due to more political instability while Wall Street was unable to continue its record highs as interest rate expectations moderated. The USD initially climbed but gave up a lot of its gains later in the session but most of the currency majors remain in a depressed state with the Australian dollar again stuck at the 66 cent level.

10 year Treasury yields retraced yet again, falling 5 points to the 4.2% level while oil prices were relatively unchanged with Brent crude finishing just above the $82USD per barrel level. Gold however was able to clawback some losses with a $30 move higher to remain above the $2300USD per ounce level.

Looking at markets from Friday’s session in Asia, where mainland Chinese share markets are looking hesitant again with the Shanghai Composite off slightly while the Hang Seng Index has restarted its selloff, closing some 0.6% lower to 17998 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 are trying to get out of their holding pattern with the Nikkei 225 up 0.2% to 38814 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 drop on the open:

Australian stocks have finished the week on a softer note with the ASX200 down 0.3% to 7724 points.

SPI futures are down 0.2% reflecting the minor moves on Friday on Wall Street. 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 are getting quite volatile with a return to the downside across the continent with the Eurostoxx 50 Index falling another 2% to close at 4839 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. ATR support has been taken out here which is ominous:

Wall Street couldn’t continue its run higher across the board although the NASDAQ put on 0.1% while the S&P500 lost nearly 0.2% to remain above 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 are now fully back in the thrall of USD as the much awaited PPI print following the previous CPI print has turned King Dollar around yet again with all the majors falling back overnight, led by Euro which maybe helping due to political tension on the continent. Euro launched up through the 1.08 handle on the CPI print but this was all taken back and then some to return to the post NFP print lows below the mid 1.07 level instead.

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 at the mid 1.07 level is still firm but may come under increasing pressure from here:

The USDJPY pair was able to hold on but failed to make any new session highs overnight, just breaching the 157 handle as of 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. This volatility speaks volumes as it shows the 158 level looming as longer term resistance overall with more range bound price action expected:

The Australian dollar also gave back most of its post CPI gains with a failure to return to the previous weekly highs, finishing just above the 66 handle later in the session.

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. I would still contend that remains here as price came back to the mid level following Fed Chair Powell’s speech, so watch the 66 handle to come under threat again:

Oil markets are still trying hard to get out of correction mode with Brent crude holding steady 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, rolling over as expected to almost breach the early Monday morning lows.

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:

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