Wall Street managed another positive session as traders await the key US CPI print tonight that will hopefully clear up the uncertainty around the Fed’s direction after Friday nights low US jobs report upset the apple cart. European markets also provided more upside direction with Asian stocks expected to follow suit here this morning.
Currencies continue to bet that US inflation will undershoot with USD still on the outer with Euro hitting a new monthly high and Pound Sterling extending its new yearly high while the Australian dollar almost managed to break above the 67 cent level.
US bond markets saw more divergence across the yield curve with the 10 yearpulling back below the 4% level as the 2 year lifted, while oil prices put in a new high with Brent crude lifting more than 2% to finish above the $79USD per barrel level for a new monthly high. Gold bounced back as well but still looks somewhat weak at the $1930USD per ounce level.
Looking at share markets in Asia from yesterday’s session with mainland Chinese share markets lifting as the Shanghai Composite closed more than 0.5% higher at 3221 points while in Hong Kong, the Hang Seng Index closed nearly 1% higher to 18659 points, continuing the start of week bounce.
The daily chart had been showing hesitation at the 19000 point level after the previous weekly retracement that bounced off the dominant downtrend (sloping higher black line). Confidence is trying to clawback here after almost touching the May lows with a very small bounce keeping daily momentum just out of oversold conditions:
Japanese stock markets however remained cautious, with the Nikkei 225 closing dead flat at 32203 points. Futures are indicating a small rise on the open given the better result on Wall Street overnight.
Trailing ATR daily support had been ratcheting higher but has paused for sometime now as the market has been going sideways with a welcome consolidation. Daily momentum has retraced nicely from overbought settings but a further retracement back down to that support zone is possible here this week as uncertainty builds:
Australian stocks zoomed higher on increased business confidence with the ASX200 closing exactly 1.5% higher at 7105 points.
SPI futures are up more than 0.5% on the bounce on Wall Street firmed overnight, with the 7000 point level looking a lot safer. Medium term price action remains on a downtrend with the daily chart just oscillating further down despite this larger bounce yesterday. Resistance overhead at the 7200 to 7300 point zone is the area to really watch:
European markets were able to clawback more of the recent big losses with the Eurostoxx 50 Index finishing 0.7% higher to 4286 points.
The daily chart showed this potential bull trap building even though weekly support at 4200 points had been continually defended, with weekly resistance at the 4350 points level the actual area to beat. Support this week will be critical at 4200 points, touched three times now in as many months so watch for any rollover here but this chart almost looks like an inverse of the ASX200 above:
Wall Street got out of its unsettled mood that has been around since Friday’s NFP print with a return to confidence as the NASDAQ closed 0.5% higher while the S&P500 lifted nearly 0.7% to extend past the 4400 point level and finish at 4439 points.
The four hourly chart is showing robust support around the 4430 point level after the market continued to stall against the monthly downtrend from the 2021 highs. Another test of the 4500 point level is still possible but Friday night’s action could also be considered a harbinger of more downside potential if the uncertainty of the Fed’s direction is not cleared up quickly with tonight’s CPI print:
Currency markets look to be locking in their NFP print reversal that saw USD sold off across the board, with Euro leading the charge once again, extending back into the 1.10 handle.
The union currency had been on a weekly downtrend with a small bounce but that has now turned into a new monthly high as the 1.10 is tested and found supportive for further upside. This move takes out two weeks or more of downside action, but a late reversal is seeing short term momentum moderate from its extreme overbought mode as the low moving average remains untouched in this meltup:
The USDJPY pair is now in a deceleration phase after a big reversal from Friday night, having lost over 400 pips in short time, finishing just above the 140 handle this morning.
The previous consolidation back down to trailing ATR support was looking like repeating itself here mid week, turning into a medium term consolidation but the BOJ pause wasn’t enough before the NFP print to steady concern with one way price action. Four hourly momentum is looking to get out of oversold mode with the return to the June lows at the 140 level providing a possible support level to halt the selling:
The Australian dollar had been under a lot of pressure following the RBA pause last Tuesday with another attempt to clear the point of control at the 67 handle overnight with some higher session lows giving support that it could finally break sometime this week.
This price action puts ATR resistance and 200 EMA (black line) levels under threat again but the inability to clear the 67 handle and the previous two weekly highs is still telling for me, so watch short term momentum which is only marginally overbought:
Oil markets are really taking advantage of the weaker USD and potential OPEC+ production cuts with another new session and closing high as WTI and Brent crude lifted more than 2% with the latter finally clearing a monthly impasse above the $79USD per barrel level.
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 but not yet threatening overhead 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:
Gold is also being helped by the weaker USD after recently threatening to rollover through the $1900USD per ounce level, but is now pushing above the $1930 level with increasing upside potential.
The daily chart had been showing a continued failure to get back above the psychological $2000USD per ounce level , with short term ATR resistance just too far away on any bounceback. All the signs are still building here for a complete capitulation below $1900 but a bounce up to the $1930 level requires that short term momentum get through resistance here that looks promising:
