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23.05.24 Macro Morning

Published 23/05/2024, 09:16 am

Wall Street couldn’t put in another record high overnight with poor earnings dragging back the broader indicies as European shares also failed to get any momentum on the continent. More Fedspeak is unsettling risk taking at the moment with the USD coming back much stronger against the major currencies with Euro at a two week low while the Australian dollar slumped below the 66 cent level.

10 year Treasury yields were able to lift slightly further above the 4.4% level on the back of the Fed minutes while oil prices continued to lose ground with Brent crude now below the $82USD per barrel level. Gold failed to stabilise and has also slumped below the $2400USD per ounce level in the wake of the stronger USD.

Looking at markets from yesterday’s session in Asia, where mainland Chinese share markets put in a slightly positive session with the Shanghai Composite up by just 0.1% while the Hang Seng Index fell back at the close to finish 0.1% lower at 19195 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 looks way overextended but this retracement could take some unwanted heat out of the market:

Meanwhile Japanese stock markets had the worst session with the Nikkei 225 closing some 0.8% lower to 38617 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 indicating a potential breakout:

Australian stocks were unable to advance yet again, with the ASX200 falling about 0.1% to 7848 points.

SPI futures are down nearly 0.9% due to the slightly negative lead 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. Momentum is finally getting out of its oversold condition but it looks like any potential upside has evaporated:

European markets are going nowhere again with selloffs across the continent, as the Eurostoxx 50 Index closed 0.4% lower at 5023 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 is still looking to turn into a larger breakout with support at the 4900 point level quite firm but that bearish engulfing one day candle is holding back the gains and possibly indicating a reversal:

Wall Street is not finding anymore confidence as well, with the NASDAQ down 0.2% while the S&P500 lost more than 0.5%, pushed below the 5300 point barrier to close at 5292 points.

The four hourly chart was showing a large move higher as all Fed roadblocks seemingly were cleared with price action getting well out of its previous slightly stalled position above the 5200 point area. Momentum is now in full swing lower:

Currency markets are now getting out of their consistent anti USD mood as traders weigh up the latest Fed minutes, swinging back to King Dollar as a result. All the majors were pushed lower overnight with Euro almost below the 1.08 handle for a two week low.

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. Short to medium term support at the 1.0630 level has been respected but momentum settings are now deeply into negative territory, indicating a continued breakdown:

The USDJPY pair took a small pause overnight after its slow move higher at the start of the week rounding off again and finishing just above the 156 handle overnight.

This price action post the epic BOJ meeting volatility was much more welcome but this reversal is not that surprising given the weakness of the USD. ATR resistance at the mid 155 handle continues to play a role this trading week as a launching point:

The Australian dollar was in a holding pattern following its kick upwards on the weaker than expected US CPI move, but couldn’t get back above the 67 cent level with last night’s reaction to the Fed minutes very telling indeed.

The Aussie has been under medium and long term pressure for sometime before the recent RBA and Fed meetings and while there was optimism in the last couple of weeks, resistance at 67 cents was too high to breach. The Pacific Peso is not taking the minutes well at all with a one way slump right through to the 66 handle:

Oil markets are no longer holding on as intrasession volatility increases again on the Iranian and Palestinian questions as Brent crude fell below the $82USD per barrel level for a new weekly low.

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:

Gold shot out of the gates over the weekend well above the $2400USD per ounce level but has been unable to hold on to this excessive volatility with a dour session overnight, breaking down and finishing at the $2380level.

Short term momentum was in extreme overbought mode so I was always wary that this move will stick with price action unable to be supported here at trailing short term ATR support at the obvious $2400 level:

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