17.01.24 Macro Morning
Chris Becker | Jan 17, 2024 10:45
The return of US traders to their desks on Wall Street overnight did not calm risk markets with further falls in European shares and the Australian dollar, which broke through the 66 cent level. The USD continued to strengthen against most of the majors with Euro now below the 1.09 handle.
US bond markets reopened with 10 year Treasury yields lifting up through the 4% level on hawkish Fed comments while oil prices were relatively stable with Brent crude up marginally. Gold however couldn’t hold on to its recent breakout, breaking below the $2030USD per ounce level.
Looking at share markets in Asia from yesterday’s session where mainland Chinese share markets only just managed to hold onto their early gains although the Shanghai Composite finished below the 2900 point barrier, closing at 2893 points while in Hong Kong the Hang Seng Index has collapsed more than 2% lower to 15865 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 back into oversold settings as price action returns to the October lows, with little chance of stabilising here:
Japanese stock markets stopped their recent big breakouts with the Nikkei 225 down nearly 0.8% to 35619 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 slumped after failing to gain any momentum, with the ASX200 down over 1% to push well below the 7500 point level, closing at 7414 points.
SPI futures are down slightly 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:
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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 0.2% lower at 4446 points.
The daily chart shows weekly support breaking at the 4480 point level as 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. Futures are indicating a poor session ahead so watch for further falls:
Wall Street reopened after the long weekend with some soft selling across the board with the NASDAQ down 0.2% while the S&P500 lost nearly 0.4% to close at 4765 points.
Short term momentum is now into oversold territory on the four hourly chart, with trailing ATR support coming under threat soon. Overall support has been strong at the 4700 point level proper but its obvious that the December highs were building as very strong resistance:
Currency markets were subdued again as King Dollar pushed higher on hawkish Fed comments as Euro broke below the recent four hourly support levels below the 1.093 level, breaking below the 1.09 handle proper as a result.
The union currency had been still looking weak here after tracking sideways for nearly three weeks as short term momentum switched to negative as price action remaineds contained well below trailing ATR resistance. While considerably oversold now it could fall further here:
The USDJPY pair found more confidence with a continued selloff in Yen resulting in surpassing last week’s intrasession high to exceed the 147 level overnight.
Four hourly momentum is now extremely overbought as the medium term trend (sloping black line) becomes a distant memory with price action exceeding last week’s high, even though I think this move remains too fast!
The Australian dollar is almost the weakest undollar as traders await the February RBA meeting with a continued breakdown well below the previous weekly to break below the 66 handle.
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. As I said previously, if you’d turn this chart upside down and you’d be bullish:
Oil markets are reducing in volatility which is never a good sign with Brent crude still wobbling around the $78USD per barrel level overnight, and 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 failed to hold on to its recent breakout high that took out the recent two week long downtrend, falling sharply to close below the $2030USD per ounce level overnight.
I was concerned about a small retracement here as there hasn’t been a new session high since that breakout but this has turned into nearly a proper reversal back down to the dominant downtrend with support at the $2040 level taken out. Watch for a potential return to the previous lows just above the $2000USD per ounce level next:
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