Overnight the latest US retail sales print surprised to the upside with a new record high on the Dow Jones and S&P500 as risk markets continue to price in the Fed cutting and the world going to hell in a handbasket with the election of Trump in November as the yield curve went further into negative zone. The USD is broadly higher but Swiss Franc has put on a surge while Kiwi remains the laggard as the Australian dollar playing catchup as it nearly breaks below the 67 cent level as it gives up its six month new high.
US bond markets saw more volatility as 10 year Treasuries yields fell back sharply to the 4.15% level. Oil prices are failing to stabilise but both WTI and Brent crude falling again, the latter now almost below the $83USD per barrel level while gold prices pushed further well above the $2400USD per ounce level despite the strong USD.
Looking at markets from yesterday’s session in Asia, where mainland Chinese share markets are still flat in reaction to yesterday’s GDP print with the Shanghai Composite up a handful of points while the Hang Seng Index is off again as it fails to gain momentum, down more than 1.6% to 17756 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 looked like turning this falling wedge pattern into something more bullish but is looking like a dead cat biounce instead:
Meanwhile Japanese stock markets reopened after their long weekend holiday with the Nikkei 225 closing some 0.2% higher at 41275 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:
Australian stocks were unable to advance with the ASX200 just not quite able to stay above the 8000 point level, closing 0.2% lower at 7999 points.
SPI futures however are up more than 0.6% on the record highs 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 now well out of its oversold condition with this breach of the 8000 point level possibly coming up against significant resistance, or a new level to launch higher from:
European markets still cant find a positive mood with solid losses across the continent again due to the higher Euro as the Eurostoxx 50 Index closed 0.7% lower to remain below the 5000 point level, finishing at 4947 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 but this time NASDAQ only lifted 0.2% while industrials led the charge, with the S&P500 closing more than 0.6% higher to a new record high at 5667 points.
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 continued volatile start to the trading week tonight if further earnings disappoint, but it seems all eyes are firming towards Trump 2.0:
Currency markets are seeing a more dominant USD due to stronger domestic economic prints but the macro concerns are shuffling sentiment around. Euro initially lost some ground before almost recovering below the 1.09 handle alongside a slightly stronger Pound Sterling and Swiss Franc.
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 with the previous session lift above the 158 level losing momentum and rolling over with a potential return to the 157 level.
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. Watch out below:
The Australian dollar has been struggling to make further gains after breaking out of its holding pattern with a further drop overnight as USD firmed and is no longer well supported above the 67 cent handle despite the potential of a rate rise from the RBA.
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 was looking 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 has now broken:
Oil markets are failing to stabilise after getting out of correction mode with Brent crude retracing again, finishing below the $84USD per barrel level overnight.
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 not just holding on to its breakout from late last week but is exceeding expectations well above the $2400USD per ounce level to make another 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:
