Wall Street lifted slightly across the board while European stocks can’t seem to find any positive momentum as ructions over interest rate cuts continue on both sides of the Atlantic. The USD came back to strength despite both Canadian and Australian local inflation prints higher than expected with Yen pushing to multi decade lows as BOJ and other officials start to ring the bell of caution around its demise. The Australian dollar couldn’t hold on to its post inflation print gains and remains below the mid 66 cent level.
10 year Treasury yields lifted strongly, up more than 8 points to the 4.32% level while oil prices were also muted with both WTI and Brent crude largely unchanged, the latter staying below the $85USD per barrel level. Gold finally broke down below the $2300USD per ounce level.
Looking at markets from yesterday’s session in Asia, where mainland Chinese share markets came back after the lunch break with the Shanghai Composite closing nearly 0.8% higher but still well below the 3000 point barrier while the Hang Seng Index is also climbing slightly, up 0.2% to 18089 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 – watch recent session lows to come under pressure:
Meanwhile Japanese stock markets are continuing their surge with the Nikkei 225 up more than 1.2% to 39679 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 possible breakout on the open:
Australian stocks were the odd ones out in the region with the ASX200 losing nearly 0.8% to 7783 points.
SPI futures are down 0.4% despite the rebound 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 finally getting out of its oversold condition but has been unable to get back into positive territory with a return to the 7900 point level not yet on the cards:
European markets are reducing in volatility with mild drops across the continent as it can’t sustain positive momentum with the Eurostoxx 50 Index closing 0.4% lower at 4915 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 here:
A broader positive result on Wall Street overnight with the NASDAQ up nearly 0.5% while the S&P500 lifted just 0.2% higher to finish at 5477 points.
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 no longer has much legs as hesitation builds, but momentum is trying to get out of the negative zone:
Currency markets are still feeling the effects of a dominant USD with King Dollar again dominating overnight as Euro failed to have any kind of push back, instead rolling back to finish below the 1.07 level again.
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. Upside pressure was starting to build here but momentum is not on Euro’s side:
The USDJPY pair was able to make another new session high, breaking straight above the 160 handle after taking a short pause amid consistent strong momentum.
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 pushes aside the 158 level as longer term resistance:
The Australian dollar zoomed out of its holding pattern yesterday on the local inflation print but gave up most of these gains overnight to head back below the mid 66 cent level.
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. Watch the 66 handle to come under threat again however as this remains unconvincing:
Oil markets are still trying to get out of correction mode with Brent crude holding again around the $84-85USD per barrel level.
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 well out of negative mode:
Gold has broken down below the key $2300USD per ounce level after slowly rolling over since the start of the trading week, as price action was unable to break above resistance at the $2340 level.
Still the biggest casualty of the reaction to the US jobs report last week, the shiny metal had consistent negative short term momentum with ATR resistance still ratcheting down without any potential upside. This could break even lower:
