15.08.23 Macro Morning
Chris Becker | Aug 15, 2023 09:24
Continued disappointment around the latest Chinese stimulus kept Asian stocks at bay yesterday and it seemed this would translate into more trouble overnight but a late rally on Wall Street from upside earnings results kept risk markets elevated. Currency markets continue to see firming to King Dollar on the safe haven with the Australian dollar unable to get back above the 65 cent handle.
US bond markets again saw some lifts across the yield curve with the 10 year Treasury remaining well above the 4.1% level while oil prices moderated slightly with Brent crude back below the $87USD per barrel level. Gold rolled over alongside other undollars on its way back down to the $1900USD per ounce level.
Looking at share markets in Asia from yesterday’s session with mainland Chinese share markets are continuing their selloff from last week with the Shanghai Composite down over 0.3% at 3177 points while in Hong Kong the Hang Seng Index has fallen back 1.5% to 18775 points.
The daily chart was showing how the 19000 point level had become strong support as price action briefly went above the dominant downtrend (sloping higher black line) following a month long consolidation. This breakout was supposed to have had further legs but daily momentum readings have now retraced back to a negative level as confidence dissipates so watch for a more complete rollover here back to the June lows:
Japanese stock markets reopened with the Nikkei 225 closing more 1.2% lower at 32059 points.
Trailing ATR daily support has paused for sometime now as the market has been going sideways after a big lift recently, with a welcome consolidation above that level. Daily momentum is getting out of oversold mode to neutral settings as price action is yet to break below the support zone, with a weaker Yen likely to help but still no activity just yet. Today’s GDP print could provide the catalyst:
Australian stocks were again unable to get any positivity going with the ASX200 down 0.8% to close below the 7300 point barrier at 7277 points.
SPI futures are flat given the volatility on Wall Street overnight, so the 7300 point level will again be tested to see if it has truly firmed as short term support instead of resistance. Medium term price action was slowly getting out of its downtrend with the daily chart suggesting a breakout here as the June highs are bested but daily momentum readings have fully retraced from being overbought but not yet negative:
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European markets failed to get a good start to the trading week as the Eurostoxx 50 Index finished just 0.2% higher at 4330 points.
While the daily chart shows weekly support at 4200 points defended, weekly resistance at the 4400 point resistance level has now re-engaged as this dip oscillates again around the point of control at the 4300 point level. There were signs of stability returning here but daily momentum is now going negative so watch out below:
Wall Street was choppy at first and then had a late rally that saw some gains on the board finally, with the NASDAQ finishing 1% higher while the S&P500 put on nearly 0.6% to start the week at 4489 points.
The four hourly chart is continuing to show a downtrend channel since the NFP print last Friday night that still a long way to go to get back to the previous weekly high at the 4600 point level. However there has been deceleration here and a possible breakout brewing so watch for 4500 points to act as short term support:
Currency markets remain enthralled to USD following last weeks CPI and the PPI print on Friday with Euro leading the way again down through the 1.09 level overnight.
Euro needed to have a strong return above trailing ATR resistance but failed despite a mid week rally to decline back to the previous weekly lows just above the mid 1.09 level. Short term momentum is now back to slightly oversold with price action suggesting a return to the start of August lows at the 1.09 handle proper:
The USDJPY pair remains on an uptrend as it surpasses its previous weekly high with a continued series of positive sessions throughout last week, extending this move after the weekend gap to well above the 145 level.
Four hourly momentum had been slightly oversold but not overextended at the start of the week with price action taking back all of last week’s reflation rally in a very quick reversal. This has now been filled and then some as momentum becomes almost overbought and price surpasses the former highs which will act as the next level of resistance:
The Australian dollar remains under the pump against King Dollar with a wishy washy session overnight that saw it remain entrenched at its new weekly low below the 65 handle.
The subsequent price action from the previous Friday night’s bounce looked unimpressive from the start, confirming the weak mantle for the Aussie as ATR resistance and 200 EMA (black line) are still quite far away in both short and medium term trends. Watch for another potential rollover here as resistance is still too firm – turn this chart upside down and you’d be going long:
Oil markets were relatively quiet again with Brent crude unable to put in another new daily high retracing back to the $86USD per barrel level, keeping on to its three month high and current uptrend.
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 and now putting aside 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 and continuing this uptrend:
Gold remains in freefall after failing to stabilise from its rout in the previous week following the Fed’s latest rate rise, rolling over and start the week just above the $1907USD per ounce level.
The four hourly chart shows the attempt at getting back up to the psychologically important $2000USD per ounce level has been over for sometime now as the recent oscillations reveal an unwinding here down to $1900, although this recent move is quite oversold and could pause here first:
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