16.01.24 Macro Morning
Chris Becker | Jan 16, 2024 10:31
A long weekend for Wall Street saw a lack of direction from other risk markets with European shares taking back their Friday night gains while ECB speakers continued to deny rate cuts are on the agenda. The USD rose against most of the majors with Euro itself fell back slightly while the Australian dollar dipped down again into the mid 66 cent level.
US bond markets were closed but other yields like German bunds lifted slightly while equally soft trading in oil prices saw Brent crude futures up only marginally. Gold is still holding on to its recent breakout, remaining well above the $2050USD per ounce level.
Looking at share markets in Asia from yesterday’s session where mainland Chinese share markets tried to hold onto their early gains as they head into the close as the Shanghai Composite again remained below the 2900 point barrier, closing some 0.1% higher at 2883 points while in Hong Kong the Hang Seng Index was down nearly 0.3% to 16215 points.
The daily chart was showing a significant downtrend that had gone below the May/June lows with the 19000 point support level a distant memory as medium term price action remained stuck in the 17000 point range before this new losing streak. Daily momentum readings are still near oversold settings as price action wants to return to the October lows, with little chance of stabilising here:
Japanese stock markets were still moving to the upside with the Nikkei 225 up nearly 1% to 35901 points.
Trailing ATR daily support was being threatened by price action after this bounce went beyond the September highs at the 33000 point level with daily momentum remaining extremely overbought. Correlations with a stronger Yen are breaking down here with a selloff back to ATR support at 32000 points unlikely as the November highs are wiped out in this breakout but I’m cautious of a strong pullback here:
Australian stocks were unable to gain any momentum from the flat session on Friday, with the ASX200 down slightly to remain below the 7500 point level.
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SPI futures are down at least 0.3% given the lack of direction from Wall Street overnight. The daily chart is no longer looking very optimistic here in the medium term with short term price action however suggesting a possible reversal underway as daily momentum starts to wane and resistance at the 7600 point level builds. Watch for any dip below the low moving average:
European markets were unable to follow through on Friday night’s rebound with losses across the continent as the Eurostoxx 50 Index finished more than 0.6% lower at 4454 points.
The daily chart shows weekly support remaining firm at the 4480 point level but a failure to make a new high above the early December 4600 point level is starting to drag overall momentum down with a full retracement now below overbought settings. Futures are indicating a poor session ahead so watch daily support which could come under attack here:
Wall Street was closed for a holiday with S&P500 futures indicating a flat restart tonight.
Short term momentum is now retracing out of overbought territory on the four hourly chart, with a very strong breakout pushing through trailing ATR resistance. Support has been strong at the 4700 point level proper but its obvious that the December highs are building as very strong resistance:
Currency markets were subdued again but the lack of traders in the US still kept King Dollar high as Euro remained around the 1.0950 level, again unable to make a new daily high.
The union currency is still looking weak here after tracking sideways for nearly three weeks as short term momentum switches to negative as price action remains contained well below trailing ATR resistance after bouncing off the December lows:
The USDJPY pair found some lost confidence with a small selloff in Yen almost resulting in a return to last week’s intrasession high to get back above the mid 145 level.
Four hourly momentum is now slightly overbought as the medium term trend (sloping black line) remains broken here with price action almost exceeding last week’s high, but I think this move was a little too fast so watch for a possible retracement:
The Australian dollar continues to look weak having absorbed the US CPI print last week as traders await the RBA meeting with what looks a breakdown back to the previous weekly lows at the mid 66 cent level.
The Aussie has been under medium and long term pressure for sometime with the latest rally just a relief valve being let off with short term momentum returning to oversold territory as traders still have another month for the RBA to come back from holidays. Turn this chart upside down and you’d be bullish:
Oil markets saw a small lift on Friday night but lack of trade is seeing Brent crude futures wobble around the $78USD per barrel level, still well contained below the key $80USD resistance level.
After almost reaching $100 in mid September, price was looking to return to the August levels around the $85 area where a point of control had been established before the recent breakout failed to push above trailing resistance at the $80 level. Daily momentum failed to get out of negative settings but is having another go here despite a possible retest of the December lows nearer the $70USD per barrel level soon:
Gold however continues to hold on after the weekend gap with its Friday night breakout above the two week long downtrend intact, still moving above the $2050USD per ounce level.
Watch for a small retracement here as there hasn’t been a new session high since that breakout with US traders possibly pushing it lower on their return this evening, so watch the $2040 level which should act as solid support going forward:
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