18.01.24 Macro Morning
Chris Becker | Jan 18, 2024 11:35
Despite a run of stronger domestic US data overnight, Wall Street wobbled as the latest Chinese GDP (and population) prints turned off risk, with the USD continuing to strengthen against most of the major currency pairs. Euro remains below the 1.09 handle while the Australian dollar is dicing with the 65 cent level.
10 year Treasury yields lifted nearly 10 points to extend through the 4% level while oil prices were again relatively stable with Brent crude up marginally. Gold however couldn’t hold on to its recent breakout, continuing its breakdown to almost get below the $2000USD per ounce level.
Looking at share markets in Asia from yesterday’s session where mainland Chinese share markets are pulling back sharply on the GDP print as the Shanghai Composite fully rejected the 2900 point barrier, falling more than 2% to 2833 points while in Hong Kong the Hang Seng Index has collapsed again, down more than 3.7% to 15276 points.
The weekly chart amply shows the significant downtrend from the start of 2023 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 are in a two day retreat with the Nikkei 225 down nearly 0.4% to 35447 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 still failing to gain any positive momentum, with the ASX200 losing more than 0.3% to now push below the 7400 point level, closing at 7393 points.
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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:
European markets are now falling faster after being unable to follow through on Friday night’s rebound with broad losses across the continent as the Eurostoxx 50 Index finished nearly 1% lower at 4403 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 was in the red all session with a rebound at the end not enough to stave off the selling with the NASDAQ down 0.6% while the S&P500 also losing the same amount to close at 4739 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 despite the latest US retail sales prints as King Dollar pushed higher although Euro was able to stabilise just below the 1.09 handle proper.
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 continues to surge with more confidence with a continued selloff in Yen resulting in surpassing last week’s intrasession high to exceed the 148 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 still the weakest undollar as traders await the February RBA meeting with a continued breakdown well below the previous weekly to remain well 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 continues to fall after failing to hold on to its recent breakout high that took out the recent two week long downtrend, falling sharply to almost close below the $2000USD 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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