05.12.22 Macro Morning
Chris Becker | Dec 05, 2022 09:58
Friday night came and went with another big US jobs figure as the NFP was released. The strong print saw USD launch higher – temporarily – while US stocks were largely unchanged by the end of the session, unable to discern what to do with the rest of the trading year. The USD eventually came back against most of the majors with Euro finishing the week at a six month high above the 1.05 handle while the Australian dollar whipsawed before finishing at its previous weekly high just below the 68 cent level. US Treasury yields came off slightly, extending their weekly decline while the commodity complex saw oil prices pullback in the wake of the OPEC hold and Ruzzian intransigence with Brent crude below the $87USD per barrel level while gold followed the undollars path to eventually finish just below the $1800USD per ounce level.
Looking at share markets in Asia from Friday’s session where mainland Chinese share markets gapped lower at the open and are retreating further with the Shanghai Composite down more than 0.3% to the 3156 point level while the Hang Seng Index was off a similar amount, down 0.4% to 18675 points. The daily chart was showing a perfect breakout here with a big surge up towards the 19000 point level, futures are indicating a good start to the week as support is still defended at the 17600 area:
Japanese stock markets also sold off sharply with the Nikkei 225 down more than 1.5%, closing at 27777 points. The lack of a clear lead from Wall Street combined with heavy resistance at the 28400 point level has turned this pause into a rollover into short term support. The daily chart shows this pullback and lack of defense at the 28000 point area clearly with daily momentum switching from positive to negative but not yet oversold. Watch ATR support next at the 27500 point level:
Australian stocks also weren’t able to escape a selloff, with the ASX200 down 0.7% to finish the week just above 7300 points. SPI futures are up slightly, about 0.2% despite the flat finish on Wall Street on Friday night with the daily chart still looking quite bullish as daily momentum remains solidly overbought. Support remains very strong throughout this uptrend, particularly at the 7000 point level which held steady during any pullback:
Get The App
European markets moved around slightly but weren’t able to advance much further after the previous big rally on Wall Street, with the Eurostoxx 50 Index closing some 0.2% lower at 3977 points. The daily chart shows key overhead resistance at the 3900 point area having been cleared but daily momentum not yet heading back into overbought status, indicating a short term build up of resistance. This small pause hasn’t translated into a drop yet, although the 4000 point level is proving key psychological resistance so far:
Wall Street again couldn’t translate the previous stonking session into more gains overnight with flat finishes across the board, the NASDAQ and S&P500 both down around 0.2% or so, the latter closing at 4071 points. The chart picture is still showing more layers of resistance compared to other market with the key 4000 point psychological level still proving solid support going forward after being defended in Friday night’s NFP print. The question is can it launch higher from here going into the usual end of year malaise:
Currency markets remained volatile amid the NFP print with the USD bears caught out for a few hours past the jobs release before taking it all back and then some, with Euro lifting above the 1.05 handle to lock in a new weekly and monthly high. Strong support was evident at the mid 1.02s before this move with the intraweek high on Monday also helping the bears get more confidence on with all the signs now pointing to a possible top in USD:
The USDJPY pair had a similar, yet inverse ride, with a lift up to the 136 handle before falling back down to its dominant downtrend to finish at the 134 level. Yen safe haven buying coupled with USD weakness around inflation concerns is smashing this pair into new territory having broken weekly support that has held all calendar year and taking price back to the June highs:
The Australian dollar was not as lucky as Euro with an inability to translate this whipsaw into a new high, finishing just below the 68 handle versus USD post the NFP volatility. It had been a wild ride last week with price action confirming a breakout above the 67 level with previous weekly highs just below the 68 level taken out. Momentum was overbought but has retraced again to positive territory but I’m watching for a further pullback to the low moving average and last week’s high at the 67.70 level:
Oil markets continue the macro battle and despite some moves in OPEC land, Brent crude remains stuck at key monthly support, retracing back to the $86USD per barrel level. Daily momentum has been oversold and setting up this swing trade but is still early stages, with price not yet above the key high moving average area. Medium term the target remains resistance at the $98 level, but there is scope to return to the September lows at $80 or so on any reversal in risk sentiment:
Gold wanting to push higher after its great mid week surge but like other undollars the whipsaw around the NFP print was too much and it held on to rather than extend its gains above the $1800USD per ounce level. This move was looking good even before the Fedspeak talk with the “still too high” inflation print sending it higher. This is looking way overextended in the short term as momentum gets extremely overbought so it will very interesting to see if support firms now at the $1800 level:
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.