22.02.23 Macro Morning
Chris Becker | Feb 22, 2023 10:54
Wall Street reopened but should’ve stayed in bed with “too hot” PMI figures across Europe and the US putting paid to the rumours that the Fed is still going aggressive on rate rises to tame inflation. European shares also headed lower with falls across the risk complex as the USD reasserted itself against the currency majors, with the Australian dollar heading back to its previous weekly low. The commodity complex saw oil prices falter as well with Brent crude losing ground to the $82USD per barrel level while gold is still in a depressed funk, with another pullback to the $1830USD per ounce level.
Looking at share markets in Asia from yesterday’s session where mainland Chinese share markets pulled back after a solid start with the Shanghai Composite eventually closing up 0.5% to 3306 points while the Hang Seng was in full reverse mode, down 1.7% to close at 20529 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, as support at the 20000 point level comes under pressure:
Japanese stock markets were also mixed with the Nikkei 225 closing more than 0.2% lower at 27473 points. After bottoming out at the 25000 point level the next level to clear is still 27500 points, which had coming under pressure in recent weeks but momentum is now catching up to other risk markets. Daily momentum has reverted out of overbought mode and had been suggesting a slide back below the low moving average next with support fading. Futures are indicating a larger pullback on the open with a break below the low moving average signalling a rollover:
Australian stocks again failed to gain traction with the ASX200 closing 0.2% lower to remain well below the 7400 point level at 7336 points. SPI futures are down at least 0.5% and could snap ever lower given the big losses on Wall Street overnight. 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 to firm here as daily momentum continues its revert from being overbought to almost negative status:
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European markets all pulled back after a failing to advance at the start of the trading week with the Eurostoxx 50 Index closing more than 0.5% lower at 4250 points, with a view to reversing the recent new weekly high. Futures are indicating a larger pullback with the trend above the 4000 point level now coming under real pressure as daily momentum reverts from 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 reopened with a bang with losses across the complex, the NASDAQ leading the way to fall 2.2% while the S&P500 lost over 1.8% to almost cross below the key 4000 point support level. The four hourly chart shows price action breaking straight through the previous two weekly lows and setting course for a full correction as Fed fears furrow the brows of traders. Former ATR support at the 4100 point area is now a key area of resistance and while this is overdone, I’m looking for a potential further selloff tonight:
Currency markets responded to the “not likely a recession in US” news via the PMI prints with a strong swing to the USD which is still prevailing against most of the major currency pairs, with a lower than expected Canadian CPI sending the Loonie lower as well. Euro remains in a funk with a losing session to push well 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 had been sliding sideways but with the strong USD repsonse overnight, its now retesting the 135 level after respecting trailing ATR support on the short term charts. Internal strength has always been following the recent weekly uptrend and while resistance had been building at the 135 handle this is now under stress again. Short term momentum is now back into overbought status and should support more upside here:
The Australian dollar was unable to make any traction yesterday with a volatile session overnight eventually turning into full on rollover this morning, hitting the mid 69 level before the Sydney open. 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 now rolling over below 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, possibly testing the January lows at $80 or so:
Gold remains somewhat depressed despite a pause yesterday morning before falling back to recent lows overnight, falling back to the $1835USD per ounce level. This continued negative price action has not yet inverted despite short term momentum indicating a possibility of a swing trade building with overheard resistance too hard to beat and the daily chart still indicating more downside below. I’m watching for a rollover back below the low moving average next:
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