02.04.24 Macro Morning
Chris Becker | Apr 02, 2024 10:34
Risk markets continue to float higher as the latest ISM manufacturing print in the US came in stronger than expected, boosting the USD and bond yields across the curve. European stocks continued their surge higher with Asian equities expected to follow in today’s session. With the USD on a tear, the Australian dollar is still struggling as it breaks below the 65 cent level for a new monthly low.
10 year Treasury yields returned to their four month high above the 4.3% level while Brent crude lifted above the $87USD per barrel level. Meanwhile gold is picking up pace as it gains momentum above the $2200USD per ounce level.
Looking at markets from yesterday’s session in Asia, where mainland and offshore Chinese share markets are making a strong comeback with the Shanghai Composite up more than 1% to extend gains above the 3300 point level while the Hang Seng followed suit, closing nearly 1% higher at 16541 points.
The 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 trying to make a run for the end of 2023 highs at 17000 points with the downtrend line broken. However this has been thwarted as monthly resistance levels are kicking in, although support is firming at the 16400 point area:
Japanese stock markets retraced again with the Nikkei 225 closing 1.4% lower at 39803 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 last month above the 40000 point level. This has now turned into short term resistance so watch for a further retracement below:
Australian stocks finished last week on a high with the ASX200 closing just below the 7900 point level.
SPI futures are looking boisterous with at least a 1% rise following the long Easter weekend and solid showing on Wall Street. 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 were somewhat better across the board with most markets closed for Easter with the German DAX helping push the Eurostoxx 50 Index higher, eventually finishing up 0.1% to 5083 points.
The daily chart shows price action still on trend after breaching the early December 4600 point highs but daily momentum retracing slightly out of an overbought phase. This is looking to turn into a larger breakout as futures indicate another rise for tonight’s session:
Wall Street was somewhat back on track overnight with some mixed results sending NASDAQ up by 0.2% while the S&P500 fell the same amount on the ISM print, closing at 5243 points.
The four hourly chart shows this slight consolidation back to a more sustainable uptrend with short term support shoring up while momentum remains in overbought mode as futures indicate the potential to exceed last week’s highs:
Currency markets continue in the thrall of USD and on the back of the latest central bank meetings and dovish ECB signalling, combined with strong US economic data, Euro fell sharply below the 1.08 handle overnight.
The union currency seemed to have support anchored at the 1.08 level which but the medium term price action was always suggesting a return to or below that level as momentum was never positive, with the 1.07 level now in sight again:
The USDJPY pair was unable to make many gains despite the rising USD overnight although it is trying to match the former highs just below the 152 level.
The medium term picture remains very optimistic as Yen sold off due to BOJ meanderings but momentum is now trying to get back into overbought mode while ATR support remains firm at the 151 handle proper:
The Australian dollar failed to return to its weekly highs with a continued pullback to short term support below the 65 cent level to match its previous monthly low.
The Aussie has been under medium and long term pressure for sometime before the RBA and Fed meetings and while the previous temporary surge looked strong, it wasn’t overbought on the four hourly chart and had not surpassed support from last week’s consolidation phase. Watch for the 65 cent handle to fail again as support here after last week’s monthly CPI print:
Oil markets are continuing their breakouts following the attacks on Russian refineries with Brent crude pushed higher to settle just below the $88USD per barrel level, now well above the previous weekly highs.
After retracing down to trailing ATR daily support at the $77 level, price had been bunching up around the February highs at the $84 level with short term momentum definitely overbought and signalling potential upside from here:
Gold had previously surged above the $2200USD per ounce level in the wake of the soft Fed meeting outcome and has returned there and then some with a big surge on Friday night turning into a a minor retracement overnight, holding just above the $2250USD per ounce.
Last week daily momentum was nearly off the charts – never a good sign – with short term support at the $2000 level turning to what could be rock solid medium term support but still the critical area to watch ahead on a likely pullback due to excessive volatility:
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