Macro Morning 11.08.23

The latest US CPI print came and went overnight and again kept the buyers at bay on most risk markets with Wall Street putting in a soft scratch session as European equities pushed higher alongside a resurgent USD. Currency markets initially sold off King Dollar but then reversed course later in the session with the Australian dollar rolling over again down to the 65 cent handle.

More action on US bond markets which saw a big lift across the yield curve with the 10 year Treasury lifting more than 10 pips to the 4.1% level while oil prices initially pushed higher but fell back slightly with Brent crude back below the $87USD per barrel level. Gold rolled over alongside other undollars on its way back to the $1900USD per ounce level.

Looking at share markets in Asia from yesterday’s session with mainland Chinese share markets have had an oscillating session, gapping higher on the open then slumping before recovering at the close with the Shanghai Composite lifting some 0.3% to 3254 points while in Hong Kong the Hang Seng Index put in a scratch session to finish at 19248 points.

The daily chart was showing how the 19000 point level has become strong support as price action bursts above the dominant downtrend (sloping higher black line) following a month long consolidation. This breakout was supposed to have had further legs but daily momentum readings have now retraced back to a more sustainable level so watch for support to firm here:

HSI

Japanese stock markets reversed course again with the Nikkei 225 closing more than 0.8% higher at 32473 points.

Trailing ATR daily support has paused for sometime now as the market has been going sideways after a big lift recently, with a welcome consolidation above that level. Daily momentum is trying to get out of oversold mode as price action is yet to break below the support zone, with a weaker Yen likely to help but its looking weak so far:

NK225

Australian stocks were able to put in a positive session again with the ASX200 lifting nearly 0.3% to close at 7357 points.

SPI futures are down 0.3% in response to the pullback on Wall Street overnight, so the 7300 point level will again be tested to see if it has truly firmed as short term support instead of resistance. Medium term price action was slowly getting out of its downtrend with the daily chart showing a breakout here as the June highs are bested but watch daily momentum readings that have fully retraced from being overbought but not yet negative:

SPI200

European markets found more buying power and mostly held on to it in post close futures with the Eurostoxx 50 Index finishing more than 1.5% higher at 4384 points.

While the daily chart shows weekly support at 4200 points defended, weekly resistance at the 4400 point resistance level has now re-engaged as this little dip oscillates again around the point of control at the 4300 point level. There are signs of stability returning here as daily momentum goes neutral however:

EUSTX50

Wall Street started well enough yet again but was flummoxed later in the session and couldn’t recover with the NASDAQ finishing flat while the S&P500 barely raised 1 point to close at 4468 points.

The four hourly chart is continuing to show a downtrend channel since the NFP print on Friday night that still a long way to go to get back to the previous weekly high at the 4600 point level. On the daily chart, trailing ATR support at the 4500 point area is now turning into resistance:

SPX

Currency markets initially rallied as the slightly weaker than expected US CPI print was absorbed but then pulled back to where they started as they remain in the thrall of USD. Euro had the biggest bounce up through the 1.10 level but then retraced fully back below that level this morning.

Euro needed to have a strong return above trailing ATR resistance here on the four hourly chart after halting its week plus long decline and hitting support just above the 1.09 handle Short term momentum had switched to slightly overbought but price action couldn’t get back above the previous weekly high at the 1.10 mid level so we have another rollover as expected:

EURUSD

The USDJPY pair is back on trend as it matches its previous weekly with a continued series of positive sessions overnight, extending its move above the 144handle.

Four hourly momentum had been slightly oversold but not overextended at the start of the week with price action taking back all of last week’s reflation rally in a very quick reversal. This has now been filled and then some as momentum becomes almost overbought and price matches the former highs which will act as the next level of resistance:

USDJPY

The Australian dollar wanted to break free but couldn’t as it remains under the pump against King Dollar with a strong bounce after the CPI print, looking at the 66 cent level briefly before slammed back down to the current weekly low.

The subsequent price action from Friday night’s bounce looked unimpressive from the start, confirming the weak mantle for the Aussie as ATR resistance and 200 EMA (black line) are still quite far away in both short and medium term trends. Watch for another potential rollover here as resistance is still too firm – turn this chart upside down and you’d be going long:

AUDUSD

Oil markets were relatively quiet with Brent crude unable to put in another new daily high although it made a new session high, retracing back below the $87USD per barrel level, keeping on to its three month high and current uptrend.

Price had been anchored around the December levels – briefly dipping to the March lows – with the latest move matching the small blip higher in May and now putting aside resistance at the $80 level. Daily momentum has picked up strongly into overbought readings with price action now clearing the last couple months of resistance and continuing this uptrend:

BRENT

Gold remains in freefall after failing to stabilise from its rout last week following the Fed’s latest rate rise, rolling over again overnight on the CPI print finishing at the $1912USD per ounce level.

The four hourly chart shows the attempt at getting back up to the psychologically important $2000USD per ounce level has been over for sometime now as the recent oscillations reveal an unwinding here down to $1900, although this recent move is quite oversold and could pause here first:

XAUUSD