14.02.24 Macro Morning
Chris Becker | Feb 14, 2024 10:37
The US core inflation print surprised to the upside overnight, sending a shock wave through Wall Street and other risk markets with bond yields spiking and the USD soaring higher. Equity futures for Asian share markets look shaky with the Australian dollar breaking down below the 65 cent level and looking very weak.
10 year Treasury yields jumped right through the 4.3% level while oil prices continued to lift with Brent crude extending its move above the $82USD per barrel level. Meanwhile gold had been under pressure before the CPI print and broke solidly below the key $2000USD per ounce level.
Looking at share markets in Asia from yesterday’s session where mainland Chinese share markets were closed for the New Year holiday, and will do so all week while in Hong Kong the Hang Seng Index was also closed.
Japanese stock markets had a major surge with the Nikkei 225 closing nearly 3% higher at 37883 points but its likely most or some of this will be recovered due to the falls on Wall Street overnight.
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 32000 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:
Australian stocks continue to do poorly as the trading week continues with the ASX200 down nearly 0.2% at 7606 points.
SPI futures are down over 1.2% due to the shock inflation print 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:
European markets didn’t like the US inflation print either with broad losses across the continent as the Eurostoxx 50 Index eventually finished 1.2% lower at 4689 points.
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The daily chart shows price action still on trend after breaching the early December 4600 point highs but daily momentum has now retraced from being well overbought with futures a pullback this evening. There were some hopeful signs this could turn into a larger breakout but markets were overextended:
Wall Street was looking positive before the inflation print albeit with some hesitation but all three bourses fell sharply with the NASDAQ down some 1.8% while the S&P500 also lost significant ground, selling off more than 1.3% to close well below the magical 5000 point level at 4953 points.
Short term momentum has retraced out of overbought territory before the print, indicating either a pause or a top but this move has taken out the tentative uptrend line and fully retraced below the 5000 point level, upending confidence:
Currency markets also reacted strongly to the strong US inflation print with USD zooming higher against everything with Euro beforehand still trying to regain its strength after being on the floor following last week’s NFP print.
The union currency had been at a new weekly low almost below the 1.07 level but this was taken out and then some for a new monthly low, hovering over that level this morning. Short term momentum has now switched to considerably oversold with price action well contained below trailing ATR resistance:
The USDJPY pair had been stabilising beforehand and then broke out significantly with a major surge through the 150 handle, pushing to a new high:
This was looking very optimistic as Yen sells off due to BOJ meanderings with momentum now considerably overbought so watch for a short term pullback to the 150 level proper as part of a mid trend consolidation:
The Australian dollar was slammed down hard and fast with a big move below the 65 handle overnight in the wake of the US inflation print, which will solidify expectations.
The Aussie has been under medium and long term pressure for sometime with the latest rally just a relief valve being let off before this realignment back to a strong USD. There were some signs of a breakout here at the 65 level but any possible inversion above trailing ATR resistance is now off the cards:
Oil markets have been able to stabilise from their recent launch higher with a solid breakout in the previous session confirmed with Brent crude now extending its move above the $82USD per barrel level overnight.
After retracing down to trailing ATR daily support at the $77 level, price is now back 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 next:
Gold had been quite wobbly following its short term rally after the FOMC and BOE meetings, unable to hold above the $2020USD per ounce level as a break below the ascending triangle pattern on the daily chart saw it extend this breakdown below the $2000 level.
Daily momentum is now in a very oversold mood with short term support at the $2000 level wiped out here as expected on USD strength with more downside potential building:
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