08.03.24 Macro Morning

Confidence continues to float equity markets higher with the latest ECB meeting adding fuel to the fire with Wall Street picking up pace and dragging European shares along with it. The USD continues to fall alongside bond yields fell back on lower inflation expectations with the Australian dollar rallying again through the 66 cent level for a new monthly high while Euro firmed and nearly pushed through the 1.10 level.

10 year Treasury yields had a bit of a round trip but ended up below the 4.1% level, while commodities saw a mixed result, with Brent crude again unable to push through the $83USD per barrel level while gold can’t be stopped above the $2100USD per ounce level.

Looking at markets from yesterday’s session here in Asia, where mainland and offshore Chinese share markets were this time falling in unison with the Shanghai Composite down 0.4% while the Hang Seng has dropped more than 0.5% lower to 16229 points.

The daily chart was starting to look more optimistic with price action bunching up at the 16000 point level, ready to possibly make a run for the end of 2023 highs at 17000 but as I warned previously, watch for any retracement down to the low moving average that could presage a full breakdown to the long term trend:

Japanese stock markets however were the worst off with the Nikkei 225 closing more than 1.2% lower at 39598 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. A selloff back to ATR support at 38000 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, with futures still not looking promising this morning:

Australian stocks were the odd ones out as the only market to lift higher with the ASX200 gaining some 0.3% closing at 7761 points.

SPI futures are up nearly 0.6% given the solid result on Wall Street overnight. 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 very positive across the continent in reaction to the ECB with the Eurostoxx 50 Index finishing more than 1.1% higher to 4974 points.

The daily chart shows price action still on trend after breaching the early December 4600 point highs but daily momentum is almost out of overbought phase. This is looking to turn into a larger breakout but watch for any falls below the low moving average or ATR support proper:

Wall Street remained on a positive track as well with the NASDAQ climbing more than 1.5% while the S&P500 finished 1% higher to close at 5157 points.

The four hourly chart shows this inversion taking it back to last week’s lows just above the 5050 point level with short term momentum floundering, but price has been supported at the corresponding daily ATR support level with a swift return above 5100 points. I’m a bit wary that four hourly momentum is still neutral and price action hasn’t surpassed the high moving average yet:

Currency markets are now fully into anti USD mode after hearing Fed Chair Powell 2nd testimony last night and the ECB’s hold decision with the DXY Index pushed down at least 0.5%, giving Euro more life and a breakout that saw it nearly push through the 1.10 level.

The union currency has made another new monthly high with a view to getting back to the 1.09 handle as momentum remains overbought in the short term and price action breaking out nicely. Watch for any pullback to the 1.0820 level and any test of the 1.08 handle itself however on a reversion:

The USDJPY pair remains the most volatile after being the most stable for several weeks as it continued its breakdown overnight that saw it cross below the 149 level and nearly finish below the 148 handley this morning.

The medium term picture was looking very optimistic as Yen sold off due to BOJ meanderings but momentum is obviously very negative as Yen buyers step in but watch for a potential violent upswing through the mid 148 level:

The Australian dollar was able to continue its own strong bounce back to get above the 66 handle overnight as it finally surpassed the early February highs.

The Aussie has been under medium and long term pressure for sometime with the short term moves above the 65 level unable to set up for another breakout with short term momentum really painting the picture of internal weakness here. Watch for any signs of a break below the four hourly low moving average presaging a return to last week’s low:

Oil markets are still failing to regain their December highs with Brent crude again stuck below the recent Friday night highs at the $83USD per barrel level as it continues to come up against weekly resistance, closing just below that level.

After retracing down to trailing ATR daily support at the $77 level, price is still above the weekly resistance levels that so far have held from the January false breakout with the short term target the late January highs above $84 still the next target:

Gold is still moving higher after some recent deceleration but really wants to keep punching through the $2100USD per ounce level, closing just below the $2160 level overnight as it again decelerates.

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:

 

Written By: Chris Becker