Wall Street reversed course on Friday night after it and other risk markets spent most of last week seeking shelter in safe havens for a variety of macro and political reasons. This was despite a slight rise in US core inflation and continued mixed earnings in US stocks, but was really just about selling exhaustion. European shares rebounded while the USD slipped against most of the majors with the Australian dollar one of the strongest until right til the end of the session as it followed Kiwi down further to finish at the mid 65 cent level.
US Treasuries saw yields drop all across the curve with the 10 year down 6 points to cross back below the 4.2% level while oil prices dropped sharply again after their poor start to the trading week as Brent crude finally broke below the $80USD per barrel level. Meanwhile gold prices rebounded with enthusiasm but missed out on crossing back above the $2400USD per ounce level.
Looking at markets from Friday’s session in Asia, where mainland Chinese share markets still went down with the Shanghai Composite losing more than 0.2% while the Hang Seng Index is going the other way, but only just finishing in the green at 17021 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 still looking like a dead cat bounce instead:
Meanwhile Japanese stock markets continued their terrible week with the Nikkei 225 down more than 0.5% to close at 37667 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 support is broken on this retracement, with futures indicating a small bounceback to start the new trading week but its a tough road to climb back:
Australian stocks were the best in the region with the ASX200 closing 0.7% higher at 7921 points.
SPI futures are up 0.7% following the good mood on Wall Street from Friday night. 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 has retraced fully from being overbought so this could be a false breakout that spreads into a proper rout but the upside volatility on Wall Street might see this come back:
European markets finally filled in some positivity after falling most of the week as all markets gains across the continent with the Eurostoxx 50 Index closing more than 1% higher to 4862 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 remains the anchor point but I’m wary of this one off move:
Wall Street finally stopped its near week long selloff but structurally still looks weak, with the NASDAQ only taking back the previous session losses while the S&P500 lifted 1% to 5459 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 previously soaring NASDAQ. Momentum was somewhat oversold but has not yet returned to positive settings and and weekly support levels are still being threatened here:
Currency markets are starting to moderate in volatility with all eyes on the Fed as the latest GDP and initial jobless claims were absorbed with the USD stabilising overnight against everything but Yen and the commodity currencies. Euro remained below the 1.09 handle but is firming at the mid 1.08 mid level.
The union currency had previously bottomed out at the 1.07 level before gapping higher earlier in the week with more momentum building to the upside with the 1.0750 mid level as support but there is too much pressure here from King Dollar so watch for a further retracement as ATR support at the mid 1.08 handle has been taken out:
The USDJPY short term chart still looks like tumbling down a series of steps here with Yen much higher again overnight although the pair bounced back to the 154 level as it failed to get back into positive short term momentum territory.
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. With this short term bounce failing to get past short term resistance, more steps down are inevitable:
The Australian dollar continued to struggle and finished with another decline later in the session to remain just above the 65 handle as macro concerns re China and iron ore continue to take a toll.
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 looks dire with medium term support now broken:
Oil markets are failing to stabilise after have a solid run in the latter half of June with Brent crude breaking down on Friday night, closing below the key $80USD per barrel level.
After breaking out above the $83 level last month, price action had stalled above the $90 level awaiting new breakouts as daily momentum waned and then retraced back to neutral settings. Daily ATR support has now been broken with short term momentum now retracing into negative mode – watch out below:
Gold is trying to get back on track with yet another rebound that may have legs although the weight of King Dollar is keeping it in check below the $2400USD per ounce level.
While it was the biggest casualty of the reaction to the US jobs report, the shiny metal was able to clock up some gains before this reversal, almost hitting the $2500USD per ounce level. The longer term support at the $2300 level remains key but the much stronger USD is very quickly turning the tide:
