01.03.24 Macro Morning
Chris Becker | Mar 01, 2024 12:12
The latest US core inflation print came in slightly lower than expected and combined with some dovish Fed comments gave Wall Street a leg up which should push the equity complex higher here in Asia to finish the trading week on a good note. The USD rose eventually amid some volatility around the print while the Australian dollar remains stuck below the 65 cent level.
10 year Treasury yields fell back alongside others on the yield curve to be just above the 4.3% level, with a June rate cut rising in probability while commodities all rose with Brent crude pushed above the $82USD per barrel level and gold lifting through the $2040USD per ounce level.
Looking at markets from yesterday’s session here in Asia, where mainland and offshore Chinese share markets were somewhat divergent with the Shanghai Composite gaining nearly 2% while the Hang Seng finished slightly lower at 16511 points.
The daily chart was starting to look more optimistic with price action bunching up at the 16000 point level, ready to possibly make a run for the end of 2023 highs at 17000 but as I warned previously, watch for any retracement down to the low moving average that could presage a full breakdown to the long term trend (black line down):
Japanese stock markets also went nowhere with the Nikkei 225 down 0.1% to 39166 points.
Trailing ATR daily support was never threatened by price action after this bounce went beyond the September highs at the 33000 point level with daily momentum getting back to overbought readings with a significant breakout. A selloff back to ATR support at 32000 points remains unlikely as the November highs are wiped out in this breakout but I’m cautious of a strong pullback here on any volatility:
Australian stocks are finally getting a wriggle on with the ASX200 up more than 0.5% to almost break the 7700 point level, closing at 7698 points.
SPI futures are up nearly 0.3% due to the strong result on Wall Street overnight. The daily chart was looking firmer with the medium term uptrend and short term price action coming together to take out the previous December highs. As I said previously, watching for any continued dip below the low moving average could see a significant pullback but watch ATR support which has been defended so far:
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European markets saw another divergence in confidence across the continent, with the German DAX lifting higher while peripheral stocks dragged the Eurostoxx 50 Index down, eventually finishing 0.1% lower at 4877 points.
The daily chart shows price action still on trend after breaching the early December 4600 point highs but daily momentum has now retraced from being well overbought with futures indicating a further pullback this evening. This is looking to turn into a larger breakout but watch for any falls below the low moving average or ATR support proper:
Wall Street finally found some positivity on the back of the inflation print with the NASDAQ up nearly 0.9% while the S&P500 finished 0.5% higher to close at 5096 points.
The four hourly chart previously showed short term momentum trying to get out of oversold territory with a nascent bearish double head pattern plus a break below the daily trend line from the January lows broken. While I was wary of short term momentum again floundering, the overnight boost above ATR support at the 5050 could setup for a larger breakout above last week’s high:
Currency markets are still somewhat anti USD but are slowly rolling over as the DXY Index gained 0.2% overnight on the US core inflation and initial jobless prints with Euro again almost breaking down below the 1.08 handle overnight before slightly recovering.
The union currency is still at a new monthly high with a view to getting back to the 1.09 handle as momentum was overbought in the short term and price action breaking out as well before last night’s wobbles. Watch for any pullback to the 1.0820 level and any test of the 1.08 handle itself however:
The USDJPY pair is now the least stable with the recent breakout reversed and then a near full breakdown on the US inflation print before a very late recovery this morning almost back to the 150 level .
This was looking very optimistic as Yen sells off due to BOJ meanderings but momentum is still considerably oversold but also setting up for a violent swing back through the 150 level proper:
The Australian dollar is still showing its true colours by being one of the weakest undollars with no upside moves overnight following the US core inflation print, remaining below the 65 cent level.
The Aussie has been under medium and long term pressure for sometime with the short term moves above the 65 level unable to set up for another breakout with short term momentum really painting the picture of internal weakness here. Watch for and signs of a new four hourly session low:
Oil markets are trying to regain their December highs with Brent crude not able to exceed the Friday night lows at the $82USD per barrel level as it continues to reject the previous weekly high overnight.
After retracing down to trailing ATR daily support at the $77 level, price is still above the weekly resistance levels that so far have held from the January false breakout with the short term target the late January highs above $84 still the next target:
Gold is trying harder to get out of its formerly depressed state following the US CPI print last week, able to punch through the $2040USD per ounce level overnight and get back on trend in teh medium term.
Daily momentum is positive and almost overbought but still positive with short term support at the $2000 level the critical area to watch with a further session highs and a bounce above short term ATR resistance required to stay on trend:
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