16.05.23 Macro Morning
Chris Becker | May 16, 2023 09:11
Last night saw US stocks finally break a five session downer with green across the board on the back of hope that the debt ceiling crisis may yet be averted, although this is rumour first and foremost. European stocks were more mixed with futures indicating that Asian markets may bring the hesitation as well. Currency markets are still bowing to King Dollar with Euro not far off its weekly lows while the Australian dollar rejected the 67 cent level again.
Meanwhile 10 year US Treasury yields rose slightly after their recent sharp pull back on the debt ceiling chaos, returning to slightly above the 3.4% level as oil prices also rebounded slightly with Brent crude getting back above the $75USD per barrel level. Gold remains tenuous however, cautiously moving nowhere to remain above the $2010USD per ounce level.
Looking at share markets in Asia from yesterday’s session where mainland Chinese share markets rebounded into the close after a reversal on the open, with the Shanghai Composite closing more than 1% higher at 3310 points while the Hang Seng has zoomed nearly 2% higher to almost get above the 20000 point level.
The daily chart is still showing resistance building above at the 20500 point level as price action wants to return to the start of year correction phase below 19000 points with a failure to make any new weekly highs since early April. This maybe changing however as support builds:
Japanese stock markets also did well, with the Nikkei 225 lifting nearly 1% higher at 29626 points. Futures are indicating a further strong start on the open that could threaten the 30,000 point level.
Overall the trend remains up following some steam taken out before the holidays as price action hasn’t yet tested the low moving average area, indicating that overall risk sentiment will not threaten trailing ATR support at 28000 points either as daily momentum remains firmly on the upside:
Australian stocks were hesitant once again as local traders failed to find any direction but the ASX200 still managed to close nearly 0.2% higher at 7267 points.
Get The App
SPI futures are flat despite the lift on Wall Street overnight as daily momentum remains positive but not exactly exciting as we move into yet another staid trading week.
The upside target in the medium term remains the April highs at 7400 points as daily momentum will try to bounce out of the negative zone with price action needing to break the high moving average band first:
European markets were able to gain some traction but only with marginally higher returns across the continent and in Brexit-land with the Euro Stoxx 50 Index actually closing dead flat to remain slightly above the 4300 point level at 4316 points.
This is another relief rally that may have legs as its much closer to the previous highs than in other risk markets, but also could be pushed over on reassessment of risk and inflation concerns.
The daily chart clearly shows price action caught between strong trailing ATR support at the 4200 point level and weekly resistance at the 4350 points level:
Wall Street finally saw the headline Dow break its five session negative streak for a marginally higher close while the NASDAQ lifted more than 0.6% as the S&P500 also finished to the upside, closing 0.3% higher at 4136 points.
The four hourly chart however shows that price action is not ready to engage higher with a lack of a new daily high since mid last week at the 4150 point level or thereabouts. There is still a likelihood that this bounce might stall before it gets back to the end of April 4200 level. However short term support at the 4120 point level remains quite firm:
Currency markets are continuing their dominant USD trend following the previous US jobs report and inflation prints with no new economic releases overnight upsetting the apple cart, with only some minor rebounds following the weekend gap to be expected.
Euro remains near its monthly low with a small pushback overnight sending the Union currency towards the 1.09 level but not yet above as it maintains a very weak position.
Short term momentum has sustained quite oversold settings with resistance now shifting to former support at that mid 1.09 level proper:
The USDJPY pair stalled slightly above its new weekly high to keep its big selloff in Yen from Friday night intact, maintaining a position just above the 136 handle.
This breakout may have more legs as short term momentum readings are only slightly overbought although immediate price action trajectory is a little steep. But having cleared trailing ATR resistance at the mid 135 level the scope for further upside is increasing:
The Australian dollar was able to put in a better post weekend gap bounce but is still failing to get back above the 67 handle where its likely to fall short and rollover again.
Price action has now definitively rejected the previous weekly previous highs (upper black horizontal line) so while the Pacific Peso has done well hold above previous overhead resistance at 67 cents, this move could see that return to the weekly lows below the 66 cent level:
Oil markets are trying to bounce back after a series of breakdowns that culminated in a bounceback that is likely to be a dead cat bounce, with Brent crude doing some short covering here to lift slightly above the $75USD per barrel level.
This still keeps price well below the December levels (lower black horizontal line) after breaching trailing ATR support previously with daily momentum almost back into oversold mode. A proper reversal will require a substantive close above the high moving average here on the daily chart before threatening a return to $70 or lower:
Gold is still recovering from its pullback following the NFP print and a quick glance at the four hourly chart shows weakness following the inflation prints as it struggles to maintain a position above the magical $2000USD per ounce level.
While there is continued buying support above previous weekly support levels just above the $1980 level, short term momentum is still into the negative zone with the potential to breakdown shortly if it can’t make a move above the high moving average:
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.