05.02.24 Macro Morning
Chris Becker | Feb 05, 2024 11:07
Market expectations are elevated to say the least with a super strong US jobs report on Friday night followed by strikes in the Middle East, with Wall Street hitting a new record high due to very impressive earnings in the tech sector. European shares were mildly positive, but all the action was again in currency and bond markets as King Dollar took its throne again, smashing all the undollars except gold. The Australian dollar was eventually pushed down to the 65 cent level.
Bond yields all zoomed higher with 10 year Treasury yields bursting nearly 20 pips up through the 4.1% level while oil prices fell back sharply as Brent crude fell through to the $77USD per barrel level. Meanwhile gold had a relatively smooth session, able to hold on just below the $2040USD per ounce level.
Looking at share markets in Asia from Friday’s session where mainland Chinese share markets fell sharply again in afternoon trade as the Shanghai Composite moved nearly 1.4% lower to 2730 points while in Hong Kong the Hang Seng Index was dead flat, closing 0.2% lower at 15533 points.
The daily chart still shows the significant downtrend from the start of 2023 with the 19000 point support level a distant memory as medium term price action remains stuck below the 17000 point zone. The recent bounce which saw daily momentum readings almost reach positive settings is just another part of this down phase with a rollover imminent as the inability to reach former support at the 16000 point level is telling:
Japanese stock markets lifted slightly with the Nikkei 225 closing 0.4% higher at 36158 points.
Trailing ATR daily support was being threatened by price action after this bounce went beyond the September highs at the 33000 point level with daily momentum remaining extremely overbought. 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 bounced up in line with Wall Street as the ASX200 closed more than 1.4% higher at 7699 points.
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SPI futures are down 0.7% or so despite the strong result Wall Street from Friday night. The daily chart is looking firmer with the medium term uptrend and short term price action coming together to take out the previous December highs. I would still watch for any continued dip below the low moving average and conversely with a breakout above the 7600 point level:
European markets remained somewhat hesitant with minor positive sessions across the continent as the Eurostoxx 50 Index finished 0.3% higher at 4654 points.
The daily chart was showing price action meandering and not yet making a solid attempt at breaching the early December 4600 point highs before this surge with daily momentum now well overbought and price exceeding the highs from December. There are some signs this slowdown could turn into a further retracement but the risk complex seems to favour more bidding tonight:
Wall Street can’t be stopped with the NASDAQ up more than 1.7% while the S&P500 gained just over 1% to close at 4958 points.
Short term momentum has retraced fully out of oversold territory on the four hourly and daily chart, now switching to nicely overbought as the 5000 point level remains the target ahead, despite the “good” economic roadblocks due to the stronger NFP and USD:
Currency markets were again the most volatile throughout Friday night’s US jobs print with the USD at first losing ground before strongly gaining overall as Euro broke through the 1.08 handle with a new weekly low in the process.
The union currency had been somewhat weak before Friday night, after tracking sideways for nearly three weeks as short term momentum switched to negative as price action remained contained well below trailing ATR resistance. After being considerably oversold there was potential building for a swing trade higher and that’s what started but was unable to be sustained through the print with a smackdown below the 1.08 level proper:
The USDJPY pair continued its recent breakdown from its sideways bullish/consolidating mood with another selloff down through the 146 level before stabilising somewhat at the 146.30 level that is reached in the previous session.
Four hourly momentum had calmly retraced from being extremely overbought with price firming and support building but the inversion below the 147 handle to a new three week low is very concerning here so watch for the 146 level to come under threat next:
The Australian dollar remains one of the weakest undollars but it was fairly volatile overnight particularly later in the session with a dash down to the 65 cent level then reversed on the ISM print to almost get back to the start of week position.
The Aussie has been under medium and long term pressure for sometime with the latest rally just a relief valve being let off with short term momentum returning to oversold territory as traders still have another month for the RBA to come back from holidays. Watch trailing ATR resistance in the short term as I think another valve could be let off soon:
Oil markets failed to stabilise after a solid breakout last week with a continued reversal overnight despite rising tensions in the Middle East as Brent crude retraced down to the $78USD per barrel level.
After clearing the key resistance level at the $80 level, daily momentum had been slightly overbought and ready to engage further to the upside, but the recent stall failed to push through so now saw the key psychological $80 level rejected so watch for the recent lows at $75 to come under threat next:
Gold continued its wobbly climb overnight with a proper move through the $2050USD per ounce level in the previous session looking through the volatility around the FOMC and BOE meetings.
Short term momentum had become overbought before going into last night’s session with the low moving average on the four hourly chart holding steady as strong short term support:
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