12.04.24 Macro Morning
Chris Becker | Apr 12, 2024 09:03
Wall Street rebounded later in the session overnight while the USD firmed even more as the ECB held fire at its latest interest rate meeting. With the inflation genie nowhere near back in the bottle, bond yields are still spiking and the USD holding down undollars although some peripheral currencies like the Australian dollar which after losing over a 100 pips is up slightly just above the 65 cent level.
10 year Treasury yields bounced up to another new 2024 high, finishing further above the 4.5% level while Brent crude was basically unchanged above the $90USD per barrel level. Meanwhile gold had its small pause and now accelerating even further higher to finish above the $2370USD per ounce level.
Looking at markets from yesterday’s session in Asia, where mainland and offshore Chinese share markets are now going the other way with the Shanghai Composite up more than 0.3% while the Hang Seng Index was in reversal mode, down 0.3% to 17086 points.
The Hang Seng Index 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 as it tried 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 were also off with the Nikkei 225 down 0.4% at 39418 points.
Price action had been indicating a rounding top on the daily chart with daily momentum retracing away from overbought readings with the breakout last month above the 40000 point level almost in full remission. Short term resistance has been defended with short term price action now retracing to support at the 39000 point level. Watch the 38000 level for signs of a true breakdown:
Australian stocks didn’t do too bad in relative terms, with the ASX200 closing just 0.4% lower at 7813 points.
SPI futures are down again, off by 0.4% despite a late rebound 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 retraced across the continent after failing to make a solid push as oil prices and macro concerns remain high with the Eurostoxx 50 Index finishing 0.7% lower at 4966 points.
The daily chart shows price action off trend after breaching the early December 4600 point highs but daily momentum retracing well out of an overbought phase. This was looking to turn into a larger breakout but this retracement back to short term support could turn into a reversal.
Wall Street finally rebounded led by tech stocks with the NASDAQ surging more than 1.6% while the S&P500 finished nearly 0.8% higher to almost get back above the 5200 point level, finishing at 5199 points.
The daily chart previously showed a consolidation that could have turned into a proper reversal here as price action broke below short term support as momentum became somewhat oversold. As I said previously, this break below the 5240 point area has setup for further downside but watch short term resistance at the 5270 point level to come under pressure next:
Currency markets are still in the thrall of King Dollar on the back of the US CPI print with further falls following the PPI print and the hold from the ECB overnight, with Euro pushed even further to almost cross below the 1.07 handle.
The union currency had bottomed out at the 1.07 level at the start of April as medium term price action with a reprieving reversal in price action back towards the 1.09 level before the inflation print. Short term resistance at the 1.0740 has been rejected as I thought with another attempt below the 1.07 level likely tonight:
The USDJPY pair is bunching up again for another breakout with a very short term consolidation post the CPI print, this time breaking through the 153 handle overnight.
The medium term picture was always somewhat optimistic as Yen sold off due to BOJ meanderings but momentum had been building before the CPI print, positive for all of the last week at least with ATR support upgraded throughout. This is likely overcooked in the short term but sets up for potential gains from here:
The Australian dollar managed a small rebound on the harsh post CPI reversal but is still struggling to climb off the deck, settling just above the 65 handle this morning.
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. As I said previously, while this reversal looks good in the short term, longer term resistance at the 66 cent handle was just too strong:
Oil markets are again pausing their breakouts following the attacks on Russian refineries, but Brent crude is holding fast on USD volatility to stay at the $90USD per barrel level overnight.
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, although now well overextended. I expect this pause to finish soon for another breakout this trading week:
Gold had been climbing to new highs through any volatility for weeks now and with a small pause after the stonking USD rise on the CPI print, its now back on track, hitting another high at the $2373USD per ounce level.
In the previous week momentum was nearly off the charts – never a good sign – with short term support at the $2100 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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