24.01.24 Macro Morning
Chris Becker | Jan 24, 2024 09:44
Risk sentiment remained buoyed overnight but a little mixed in European markets with Wall Street pushing slightly higher as traders anticipate some large economic releases mid week. Chinese shares finally stopped their selloff yesterday so we may see a reshuffling of fortunes here in Asia on the open with local stocks looking like bouncing higher. USD regained some strength in the absence of economic releases on the calendar as Euro plunged below the 1.09 handle to a weekly low while the Australian dollar followed suit to the mid 65 cent level.
10 year Treasury yields were up about 5 points to get back above the 4.1% level with chances of a March rate cut starting to firm while oil prices were able to lift slightly as Brent crude headed above the $79USD per barrel level. Gold also bounced back after recently almost breaking below the $2000USD per ounce level but is still under the thumb of King dollar.
Looking at share markets in Asia from yesterday’s session where mainland Chinese share markets were trying to not fall back again as the Shanghai Composite eventually surged at the close to finish some 0.6% higher at 2770 points while in Hong Kong the Hang Seng Index is taking back its previous bad day, up 2.6% to 15369 points.
The daily 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 now retracing from oversold settings as short term price action indicates a bullish engulfing candle which could be the start of a new swing higher:
Japanese stock markets however were more sedate with the Nikkei 225 closing nearly dead flat at 36517 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 on any volatility:
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Australian stocks put in a solid session with momentum building as the ASX200 lifted more than 0.5% to breakthrough the 7500 point level, closing at 7514 points.
SPI futures are up 0.2% in line with the small gains on Wall Street overnight. The daily chart is still looking somewhat mixed here despite the medium term uptrend with short term price action however still suggesting a possible reversal underway as daily momentum starts to wane and resistance at the 7600 point level builds. Watch for any continued dip below the low moving average and conversely with a breakout above the high moving average:
European markets were unable to hold on to their recently found confidence with mild scratch sessions across the continent as the Eurostoxx 50 Index finished 0.3% lower at 4465 points.
The daily chart shows price action meandering and not yet making a solid attempt at breaching the early December 4600 point highs as overall momentum remains somewhat negative. Futures are indicating another staid session for tonight:
Wall Street climbed throughout the session but didn’t hold on to all the gains with the NASDAQ pushing 0.4% higher while the S&P500 gained just 0.2% to close at 4859 points.
Short term momentum has slightly retraced from extended overbought territory on the four hourly chart, with this solid breakout taking out trailing ATR resistance and the weekly highs overhead. Overall support has been strong at the 4700 point level proper but with those December highs as very strong resistance now breached we could see a swift run up to 5000 points:
Currency markets increased in volatility as traders await tomorrow’s ECB meeting and US GDP prints with King Dollar regaining momentum against most of the majors with Euro plunging 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 remains contained well below trailing ATR resistance. After being considerably oversold there was potential building for a swing trade higher here, but the break below the low moving average has seen a new weekly low:
The USDJPY pair remains in a sideways bullish/consolidating mood after its recent big surge with the 148 level still proving strong short term support as it tried to reach last Friday’s high overnight.
Four hourly momentum has calmly retraced from being extremely overbought and price firms here with support building at the 147 handle below:
The Australian dollar is still the weakest undollar as traders await the February RBA meeting with another rollover overnight sending it well below the 66 level with short term resistance just too strong for now.
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 – but watch trailing ATR resistance in the short term:
Oil markets saw another mild uptick that could be the start of a potential breakout given the recent amount of low volatility with Brent crude breaching the $80USD per barrel level overnight as tensions mount in the Middle East.
While still well contained below the key $80USD resistance level, daily momentum is now out of negative settings and setting up for a potential swing higher so watch carefully for a breakout soon:
Gold looked weak after the weekend gap with the early Asian session sending it back to the $2020USD per ounce level but its having another go at restoring the small rally from mid last week.
While a good start, this bounceback is not yet enough to get back above the dominant downtrend with support at the $2040 level still hovering overhead as resistance. Watch for a potential return to the previous lows just above the $2000USD per ounce level next:
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