04.08.23 Macro Morning
Chris Becker | Aug 04, 2023 10:19
Global stock markets remain under pressure heading into tonight’s US jobs report with the weekly initial jobless claims coming in as expected but more PMI survey’s indicating a softening of the US economy. The Bank of England raised rates for the 14th month in a row which didn’t settle European markets while the USD remains King as the Australian dollar almost headed below the 65 handle again.
US bond markets saw further selloffs with the 10 year Treasury extending its move above the 4% level for a new five month high while oil prices lifted on news of more production cuts coming out of Russia with Brent crude back up to the $85USD per barrel level. Gold is failing to beat back the USD uptrend as it floats back down to the $1930USD per ounce level.
Looking at share markets in Asia from yesterday’s session with mainland Chinese share markets are having the only really positive sessions with the Shanghai Composite about to close 0.6% higher at 3280 points while in Hong Kong the Hang Seng Index was bouncing back, but turned over at the close to finish 0.4% lower at 19420 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 should have had further legs but daily momentum readings have now retraced back to a more sustainable level so watch for support to firm here:
Japanese stock markets remain spooked with the Nikkei 225 closing nearly 1.6% lower at 32159 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 now gone oversold instead which is ominous as price action heads to the support zone, with a weaker Yen here not helping:
Australian stocks sold off as well with the ASX200 closing 0.6% lower at 7311 points.
SPI futures are flat, currently down about 0.1% in line with the late stability on Wall Street overnight, which again will test the 7300 point level 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:
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European markets also continued their own sell off across the continent with the Eurostoxx 50 Index closing more than 0.7% lower to retrace well below resistance at the 4400 point level, finishing at 4304 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 gains momentum with a probable return to the previous weekly lows at 4200 points likely:
Wall Street still sold off but decelerated somewhat at the end of the session with the NASDAQ only losing 0.1% while the S&P500 finished just 0.2% lower at 4501 points.
The four hourly chart was showing a sideways bent after the previous weekly uptrend that got a little out of hand recent with a consolidation that has now turned into a dip. The 4600 point zone was the area to watch going into this week’s NFP print but this retracement needs to get back above the 4550 area fast or could spread further if tonight’s NFP print is too strong:
Currency markets remain on the USD side with everyone waiting for tonight’s US jobs report with the latest Fitch downgrade still being absorbed by bond markets. Euro has arrested some of its decline following last week’s ECB meeting with a stabilised move to the mid 1.09 level.
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 pulling back after engaging to the upside after last week’s BOJ meeting with an impressive rebound but a small return to the mid week point just below the 143 handle has taken some heat out of this run.
Four hourly momentum was in considerably overbought mode with price action now matching 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 but I’m wary of a mild pullback here:
The Australian dollar is also trying to gain some stability here after getting pushed decisively down on ECB dovishness and then again on the US GDP print, keeping the Pacific Peso depressed at just above the 65 cent level as the RBA makes it the weakest of the majors.
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:
Oil markets are re-engaging after more production cut news overnight with Brent crude returning back to the $85USD per barrel level, maintaining 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 setting up for a new potential uptrend:
Gold was trying to get back after its mid-session rout last week following the Fed’s latest rate rise, but extended its new weekly lows overnight with a fall below the $1940USD per ounce level.
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:
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