13.10.22 Macro Morning
Chris Becker | Oct 13, 2022 10:42
Wall Street had another volatile session following the release of the latest Fed minutes, where their commitment to tackling inflation remains robust, to say the least. European shares couldn’t find any direction either with the net result that Asian futures are looking at more downside today. The USD continues to take a pause against the major undollars with Euro hovering just above the 97 handle while the Australian dollar also failed again to breakout above the 63 cent level. US bond markets firmed slightly with 10 year Treasury yields down to the 3.9% level commodities saw a continued pullback in oil prices despite Saudi shenanigans with Brent crude falling back to the $92USD per barrel level while gold is still under pressure as it remains well below the $1700USD per ounce level, currently at $1673 this morning.
Looking at share markets in Asia from yesterday’s session where Chinese share markets lifted sharply after the lunchbreak with the Shanghai Composite up 1.5% to 3025 points, finally able to get back above the 3000 point barrier while the Hang Seng Index remains in sell mode, closing 0.8% lower to solidify its break below the 17000 point level. The daily futures chart shows how this dead cat bounce was just a blip in the dominant trendline, with this break below the 17000 point level likely to accelerate the selloff:
Japanese stock markets were hesitant with Nikkei 225 closing dead flat after a previous thrashing, closing at 26396 points. The daily futures chart shows similar price activity to other stock markets, with another dead cat bounce that has rejected overhead resistance at the 27500 level. Futures are indicating a flat start today on the continued Wall Street hesitation, so this is another market is likely to see the recent returns wiped out as daily momentum fails to confirm a swing play:
Australian stocks again escaped a major selloff event, instead the ASX200 finished dead flat but still below the 6700 point level, closing at 6647 points. SPI futures are indicating a minor drop on the open, down another 0.3% or so as downside volatility remains the higher possibility. Yet another daily chart that shows price reverting and creating another dead cat bounce after failing to get back to the August highs. Another return to the June lows is on the cards here as daily momentum heads back towards the oversold zone:
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European stocks are still under a lot of pressure with minor falls and scratch sessions across the continent with the Eurostoxx 50 Index closing 0.2% lower at 3331 points. The daily chart has shown price action never really threatening overhead resistance at the 3550 level, with daily momentum able to swing out of its oversold position but never translate that into anything positive. Watch another dead cat bounce here that looks set to return to the June lows, with another close below the low moving average setting things in motion:
Wall Street tried to move somewhere higher but failed at the release of the FOMC minutes, although some late buying stalled major falls, with the NASDAQ down just 0.1% while the S&P500 lost 0.3% to remain below the 3600 point level at 3577 points. The four hourly chart was showing some price action deceleration here, coming up to the previous weekly lows at the 3600 point level which could be building as support. However, there is no buying evident here above the 3650 point level so yet another dead cat bounce that could see the corpse push through the 3600 point area next:
Currency markets continue to hold ground against the ever strong King Dollar, with last night’s volatility fairly benign as the Euro went almost nowhere after previously trying to push back up towards the 98 handle. This is an interesting pause as it looked set to take back most of its last two weeks of upside action, with short term momentum getting out of technical oversold settings as support builds at the 96.80 level here, but note zero effort above the high moving average:
The USDJPY pair continues to push above its previous holding pattern, now extending past the 146 level after hitting a new high on the four hourly chart. Short term momentum has remained in overbought mode since Friday with the USD just too strong despite the usual firm correlation with the defensive Yen. Watch for a potential pullback, but the 145 level is now firming as solid weekly support:
The Australian dollar wanted to continue its rollover below the 63 handle but another small blip higher couldn’t overcome the internal weakness with a return to the intrasession low at the 62.70 level this morning. This continues to firm my contention that resistance is just too strong at all the previous levels with the 68 handle still the area to beat in the medium term. Short term momentum remains just oversold and maybe setting up for another breakdown soon:
Oil markets continued their mild retracement overnight despite the greater tensions in Iran and Ukraine with Brent crude pulling back to the $92USD per barrel level. While daily momentum has switched to a more positive setting than before, its not yet overbought with price action unable to get back above the high moving average, so I continue to watch is short term resistance at the $96 level:
Gold has been unable to get out of its rollover below the $1700USD per ounce level following its failure to hold on to that level on Friday night, having a narrow session this time, which still saw it finish at the $1670 level. This continues to show how weak internally the shiny metal really is, unable to clear easy resistance levels, and brings back into focus the multi-monthly bearish setup and potentially ends the early stages of a bottoming action:
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