A new trading week that will be capped by Friday’s US non-farm payrolls jobs report is starting off well enough as Wall Street had a small advance overnight while the USD continued to firm against the other major currencies. The Australian dollar is lifting up towards the 67 cent level in anticipation of today’s RBA meeting where the central bank is likely to raise rates again.
US bond markets saw a small drop across the yield curve with the 10 year retreating just below the 4% level while oil prices advanced on their recent gains with Brent crude now pushing above the $85USD per barrel level. Gold is trying to beat back the USD uptrend but is still floating along at the $1970USD per ounce level.
Looking at share markets in Asia from yesterday’s session with mainland Chinese share markets had modest sessions but still very positive with the Shanghai Composite closing nearly 0.5% higher at 3291 points while in Hong Kong the Hang Seng Index has pushed more than 1.5% higher to finally breakthrough the 20000 point barrier.
The daily chart is now 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 could have further legs but daily momentum readings are getting into extreme levels and ripe for a minor pullback:
Japanese stock markets have re-engaged to the upside following the BOJ meeting with the Nikkei 225 closing 1.2% higher at 33172 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 has returned to overbought settings with this retracement down to the support zone probably over for now, as a possible breakout is now brewing on the weakening Yen trend:
Australian stocks have been the sour note of the day with the ASX200 closing nearly dead flat with a scratch session at 7410 points.
SPI futures however are up more than 0.3% on the continued lift higher on Wall Street overnight, as it still looks like that the 7300 point level has firmed as short term support instead of resistance. Medium term price action is slowly getting out of its downtrend with the daily chart showing a breakout here as the June highs are bested:
European markets continued to lift across the continent with the Eurostoxx 50 Index up 0.4% as it continues to push aside resistance at the 4400 point level, closing at 4471 points.
The daily chart showed this potential bull trap building even though weekly support at 4200 points had been continually defended, with weekly resistance at the 4350 points level the actual area to beat. Support has been broadly defended at 4200 points, touched three times now in as many months but the 4400 point resistance level is now broken:
Wall Street was also able to follow through with all three bourses lifting, albeit with more modest sessions as the NASDAQ only gained 0.2% while the S&P500 only finished 0.1% higher at 4588 points.
The four hourly chart continues to show a good uptrend that got a little out of hand recent with a welcome consolidation, now pushing towards the 4600 point zone following the Fed’s latest meeting. This week’s NFP print could unsettle the trend so watch for support and a potential short term retracement below the 4550 area:
Currency markets continue to hold fast to the idea that the Fed will keep raising rates as we head into the all important Friday night US jobs report – aka non-farm payrolls. This is evidenced by Euro continuing its decline following last week’s ECB meeting and US GDP print with a break back down below the 1.10 level again overnight.
Euro had halted its week plus long decline after hitting support just above the 1.10 handle mid week before getting slammed back down to the 1.09 handle and then bouncing slightly back on Friday night. Short term momentum remains negative so I’m watching for another rollover tonight:
The USDJPY pair is re-engaging to the upside after last week’s BOJ meeting with an impressive rebound that is taking the pair above the 142 handle.
Four hourly momentum has switched back again to overbought mode with price action now exceeding the recent weekly highs following a very good weekend gap higher. This leaves room for more potential upside as the USD continues to firm into Friday’s US jobs report:
Last week, the Australian dollar was pushed decisively down on ECB dovishness and then again on the US GDP print, keeping the Pacific Peso depressed below the 67 handle but going into today’s RBA meeting has seen some life return albeit limited.
Recent price action put ATR resistance and 200 EMA (black line) levels under threat but short term momentum has rolled over into oversold status, confirming a break of weekly support and setting up for more downside below if it cannot exceed that level after today’s meeting:
Oil markets are advancing on their recent swift gains with Brent crude lifting again overnight, pushing through the $85USD per barrel level to maintain a three month high.
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 setting up for a new potential uptrend:
Gold is trying to get back after its mid-session rout last week following the Fed’s latest rate rise, with a fall to the $1940USD per ounce level now filled up towards the $1970 level but still shy of the recent weekly highs.
The four hourly chart shows the attempt at getting back up to the psychologically important $2000USD per ounce level is likely over as a new two week low made swiftly cannot be returned as such without a lot more effort. Watch for a potential unwinding here down to $1900:
