21.02.23 Macro Morning
Chris Becker | Feb 21, 2023 10:35
With Wall Street closed for the long weekend holiday other markets had to provide a lead, but European shares were mixed amid the Biden visit to Ukraine and in absence of other economic reports. This has again left Asian markets with a weak lead with most futures indicating slightly lower or flat starts on the open this morning. Currency markets saw a mild pullback in strength against USD but that was mainly due to Euro while the Australian dollar was able to have a little look above the 69 cent level. The commodity complex saw oil prices almost unchanged with Brent crude almost lifting up to the $84USD per barrel level while gold is still in a depressed funk, with its gap higher pulled back overnight to finish where it started around the $1840USD per ounce level.
Looking at share markets in Asia from yesterday’s session where mainland Chinese share markets are building in confidence after last week’s poor trading with the Shanghai Composite up 1% to 3258 points while the Hang Seng is also on the move higher, up 0.8% to 20816 points. The daily chart is still showing a rollover and downtrend following the NY breakout that was unable to breach the 23000 point level. Price action has continued below previous ATR support with momentum still into oversold territory despite yesterday’s rally, as support at the 20000 point level comes under pressure:
Japanese stock markets were somewhat mixed with the Nikkei 225 closing dead flat at 27501 points. After bottoming out at the 25000 point level the next level to clear is still 27500 points, which was coming under pressure but momentum is waning. Daily momentum has reverted out of overbought mode and was suggesting a slide back below the low moving average next but support is holding quite strongly although futures are indicating a small pullback on the open – watch for any break below the low moving average:
Australian stocks went nowhere with the ASX200 closing dead flat to remain well below the 7400 point level at 7351 points. SPI futures are down 0.4% without a clear lead from a closed Wall Street with the recent lack of confidence translating into further falls on the open. The daily chart is still showing a clear rollover after being unable to take out 7500 points, with a retracement below ATR support at the 7200 point level continuing here as daily momentum continues its revert from being overbought to almost negative status:
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European markets were unable to advance with the Eurostoxx 50 Index eventually closing 0.1% lower at 4271 points, easing off the throttle but still holding on to a new weekly high. Futures are indicating a slight pullback tonight with the trend above the 4000 point level still somewhat stable with daily momentum still in overbought mode. The 4000 point level remains the key psychological resistance level that has now turned into support going forward, with a melt up higher still in effect:
Wall Street was closed due to the long weekend holiday with S&P500 futures indicating a small gap lower on the open tonight as it peels back from the Friday night session. The four hourly chart shows price action almost breaking into a new weekly low before a very late bounce on Friday night saw it stave off more selling. Fed hawkishness continues to weigh on the market with former ATR support at the 4100 point area the key level to beat:
Currency markets were fairly quiet overnight in the absence of US traders with USD still prevailing against most of the major currency pairs. Euro remains in a funk with a sideways session to remain below the 1.07 handle with the four hourly chart showing a clear downtrend in recent weeks with a failure to make any new highs. It still looks very weak here where I’m watching for a retest below the 1.0650 mid level next:
The USDJPY pair slid sideways overnight without a lead to be just above the 134 level and trailing ATR support on the short term charts, indicating internal strength remains very positive. Resistance has been building at the 135 handle however with short term momentum having reverted from being extremely overbought to nominally positive after the Friday night inversion, with a view to watching if price action breaks below support at the mid 133 level next:
The Australian dollar was able to gap higher yesterday morning but failed to turn that into a sustainable rally despite just getting above the 69 level where it sits this morning. This weak overall price action comes after a weak response to last week’s unemployment numbers that has not yet challenged interest rate expectations and I’m still watching for a further pullback or even new weekly lows next:
Oil markets are still failing to follow through on their recent bounce from the Russian cutbacks with Brent crude remaining stuck at the $83USD per barrel level with another lower daily session. Daily momentum has sharply inverted into the negative zone and never went near overbought in this recent surge, with price action also failing to beat the $88 highs from January. This spells more downside:
Gold remains somewhat depressed despite a gap higher over the weekend that hasn’t translated into further gains overnight, sitting right on the $1840USD per ounce level. This continued negative price action has not yet inverted despite four hourly momentum indicating a possibility of a swing trade building with overheard resistance too hard to beat. I’m watching for a rollover back below the low moving average next:
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