All eyes on central bankers overnight as ECB President Lagarde, BOE Governor Bailey and Fed Chair Powell gave their thoughts in respective speeches that put a dampener on Wall Street’s recent bounceback. Powell reitereated that at least two more rate hikes are needed as the strong US labour market keeps pushing the economy forward without much effect on inflation (he hasn’t got the memo that its corporate profits doing all the inflation lifting)
Despite the hawkish mood, US bond markets saw a drop in yields with 10 year Treasuries down to the 3.7% level again while oil prices stabilised with Brent crude holding below the $74USD per barrel level. Gold also rolled over back to its recent weekly low, almost breaking the $1900USD per ounce level.
Looking at share markets in Asia from yesterday’s session where mainland Chinese share markets were down considerably mid session but bounced back with the Shanghai Composite treading water at 3189 points while the Hang Seng Index roughly did the same, finishing up 0.1% to the 19172 point level.
The daily chart was showing a series of strong sessions that took it back above the previous resistance zone as daily momentum became positive and overbought, retracing most of the May losses. However this sharp reversal trend needs a lot of fill shortly or will follow through below the 19000 point level as part of the overall downtrend:
Japanese stock markets shot out of the gate and then some with the Nikkei 225 closing more than 2% higher to 33193 points. Futures are indicating a small lift on the open given Wall Street’s unease overnight.
Trailing ATR daily support had been ratcheting higher but with the 33000 point level now broken and daily momentum retracing from overbought settings we could see a further retracement back down to that support zone. A consolidation back to 31000 points is still sorely needed to take some heat out, but I won’t be surprised if the recent high is tested again:
Australian stocks had a very solid session with the ASX200 closing more than 1% higher at 7196 points.
SPI futures are flat given the uneasy finish on Wall Street overnight with a steep recovery required to get back to the previous weekly highs near ATR resistance at 7300 points. This level may just be too far out of reach as medium term price action from the March highs remains somewhat intact:
European markets were robust across the continent with solid gains as the Eurostoxx 50 Index finished nearly 1% higher at 4344 points.
The daily chart was previously showing a clear breakout that turned into a bull trap but weekly support at 4200 points has so far been well defended. Weekly resistance at the 4350 points level is the true area to beat next with support below remaining quite firm but not enough to let prices accelerate away:
Wall Street however stumbled again with the Dow retreating, the NASDAQ lifted slightly while the S&P500 finished dead flat at 4376 points, still shy of the key 4400 point level after being higher mid session.
The four hourly chart showed a decline from the start of last week that looks to be over with this breakout but the 4400 point level is not broken in the physical market. Short term momentum has switched to broadly positive and almost overbought but overhead resistance is not yet under threat:
Currency markets saw a return of USD strength following the central bank talkfests overnight with Euro pulling back against King Dollar alongside Yen and the Aussie which remain in the doldrums.
The union currency was pushed back down to the 1.09 handle as it reacted poorly to Powell’s suggestion of firming rate hikes from the Fed. The previous attempted breakout to test the April highs above the 1.10 handle has been thwarted so watch for the start of week position just below the 1.09 level to come under threat next:
The USDJPY pair was able to keep advancing overnight despite stronger moves in Euro with a push above the 144 level for yet another record high as Yen deflates.
The previous consolidation back down to trailing ATR support was looking like repeating itself here mid week, turning into a medium term consolidation but the BOJ pause and Fed Chair Powell’s comment is giving the pair new life. Four hourly momentum is back into overbought mode as short term price action never touches ATR trailing support in this very steady uptrend:
The Australian dollar is now accelerating downwards given yesterday’s lower CPI print locally, with a pullback to the 66 handle where it sits this morning, having lost nearly 4% against USD in recent weeks.
ATR support is a long way away after the Pacific Peso failed to put previous overhead resistance at 67 cents aside with domestic recession concerns and an aggressive Fed overshadowing any attempt at the RBA in managing inflation, so we’re likely to see more downside ahead:
Oil markets were able to firm slightly despite a stronger USD with macro concerns still outweighing large gains as Brent crude lifted towards the $74USD per barrel level, but still at a weekly low.
Price remains anchored around the December levels and the March lows with daily momentum still negative with no new weekly highs. A proper reversal will require a substantive close above the high moving average here on the daily chart before threatening a return to $70 or lower:
Gold is failing to stabilise at all with a fall below its low from the Friday night session as it headed straight down to the $1900USD per ounce level, sitting there this morning.
The daily chart had been showing a continued failure to get back above the psychological $2000USD per ounce level , with short term ATR resistance just too far away on any bounceback. All the signs were building here for a complete capitulation below $1930 so watch for another rollover down to the $1900 level next as momentum returns to oversold settings:
