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28.05.24 Macro Morning

Published 28/05/2024, 10:03 am

Wall Street was closed overnight for a holiday with risk markets still advancing despite its absence with volatility reducing somewhat across the risk complex. European shares are finding more momentum outside of Brexitland with futures suggesting a strong start here in Asia today. The USD lost some further ground although Yen remains slightly depressed with the Australian dollar continuing its move above the 66 cent level.

US Treasury markets were closed with commodity markets also taking a breather but futures are indicating oil prices will rebound on the open with Brent crude up near the $82USD per barrel level while gold also lifted following the weekend break but remains depressed well below the $2400USD per ounce level.

Looking at markets from yesterday’s session in Asia, where mainland Chinese share markets surged at the close with the Shanghai Composite up by more than 1% or so while the Hang Seng Index followed suit to close more than 1.2% higher at 18827 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 before a potential second run:

Meanwhile Japanese stock markets were the relative poor performers with the Nikkei 225 only managing a 0.6% gain to 38900 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, with futures are looking optimistic:

Australian stocks are trying to bounce back, with the ASX200 up nearly 0.8% to 7788 points.

SPI futures are up only slightly without a lead from a closed 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 was finally getting out of its oversold condition but it looks like any potential upside is sliding:

European markets were stronger all across the continent, although the FTSE continues to tumble with the Eurostoxx 50 Index closing nearly 0.5% higher at 5059 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 resistance maybe too strong overhead:

Wall Street was closed for Memorial Day holiday with futures looking to send the complex up higher on the reopen tonight.

The daily 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. However this mid week slump could turn into a reversal yet daily momentum has only just retraced from a full overbought mode:

Currency markets were moving more towards USD dominance as the latest US initial jobless claims indicated a quite firm employment market with traders swinging back to King Dollar as a result but a lot of that movement has been thwarted by the double whammy better than expected prints on Friday night. Euro has continued its rebound, leading the majors to remain well above the 1.08 level.

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 did get into strongly negative territory, and have now gone positive with the potential to refill the lost ground:

The USDJPY pair wasn’t able to advance further from its new weekly high to stay just below the 157 handle but still looks positive despite the anti USD mood.

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, with support advancing in each session:

The Australian dollar was facing increasing pressure as more pro-US economic measures come in while the local economy is staring down recession, but the Pacific Peso was able to stave off falling sharply below the 66 handle on Friday night. It continued a strong rebound over the weekend to get past the mid 66 level as a result

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. I still reckon the 66 handle will break soon as successive levels of resistance continue to ramp down:

Oil markets are trying to get back on track but the trend is still down as Brent crude was above to almost get back above the $83USD per barrel level overnight after only very recently making a new weekly low at the $81 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:

Gold was able to stop falling on Friday night and has rebounded coming out of the weekend gap but still remains well below the $2400USD per ounce level, finishing just above the $2350 level this morning.

Short term momentum has retraced out of oversold mode but remains negative with the target to reach in this rebound at trailing short term ATR resistance at the $2380 level:

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