24.10.23 Macro Morning
Chris Becker | Oct 24, 2023 10:27
Big moves in bond markets overshadowed some stability returning to equities overnight in the absence of any major economic events with Wall Street eventually stumbling to a mixed finish. The USD was under the pump with Euro pushing to a new two week high as the Australian dollar continues to float sideways around the 63 cent level.
US bond markets again saw a test of the 5% yield for 10 year Treasuries, before a sharp reversal back to the 4.83% level while oil prices pulled back slightly instead as Brent crude finsihed below the $91USD per barrel level. Gold consolidated slightly but remains near the $1980USD per ounce level.
Looking at share markets in Asia from yesterday’s session mainland Chinese share markets dropped back again with the Shanghai Composite down 0.8% to close at 2956 points while in Hong Kong the Hang Seng Index is having a market holiday, thankfully.
The daily chart is still showing a significant downtrend that has gone below the May/June lows with the 19000 point support level a distant memory as medium term price action stays well below the dominant downtrend (sloping higher black line) following the previous month long consolidation. Daily momentum readings are stuck in oversold mode and price is now well below recent support levels, so watch out below:
Japanese stock markets also lost ground with the Nikkei 225 closing some 0.5% lower at 31111 points.
Trailing ATR daily resistance was coming under threat in a very fast bounceback and while daily momentum retraced back from oversold settings as price action is following Chinese markets with a typical dead cat bounce pattern forming here. Futures are indicating another big move lower on the open so I’m watching for a return to the previous monthly low at 30000 points proper:
Australian stocks were unable to escape the weekend selling with the ASX200 closing nearly 1% lower at 6844 points, firming the break below at 7000 points from last trading week.
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Despite some relief across the risk complex, SPI futures are indicating a 0.2% drop on the open this morning with the 7000 point level now firming strongly as short term resistance. The daily chart is not looking optimistic here with medium term price action continuing to move sideways at best, with an ominous breakdown brewing:
European markets tried to re-engage to the upside but it was messy at best with the Eurostoxx 50 Index eventually gaining 0.4% to finish at 4041 points.
The daily chart shows an overall decline with weekly support at 4100 points no longer defended, as weekly resistance firms at the 4300 point resistance level. There were signs the previous little bounce was running out of steam as daily momentum remained neutral at best, with a return to oversold settings now setting up further downside:
Wall Street was quite mixed throughout the session with only the NASDAQ returning a positive result, up 0.2% while the S&P500 continued to stumble, finishing 0.2% lower at 4217 points.
The four hourly chart showed support building at the 4340 point area with upside resistance still quite firm at last week’s high at the 4430 level before this selloff. Short term momentum remains in oversold territory as price action breaks down and pushes to a new monthly low, but there are signs of a potential swing trade here so watch the high moving average level:
Currency markets finally went against USD overnight with King Dollar failing to go full safe haven mode against most of the majors as Euro broke out well above 1.06 handle.
On the four hourly chart the union currency finally broke through short/medium term resistance at the 1.06 handle, pushing short term momentum to extremely overbought levels. Support at the recent weekly lows around the 1.05 level was very firm before this move which makes for a new two week high, but I expect a small pullback shortly:
The USDJPY pair was unable to hold onto its breakout above the 149 level by failing to build further through the 150 handle to push for a new weekly high, almost pulling back to trailing ATR support.
Four hourly momentum shows a reversal of overbought settings as the potential for a proper test of support at the 149 level but Yen buying is not yet evident:
The Australian dollar had been dragged back to the 63 handle on the weekend gap open yesterday morning but found some life on the back of a weaker USD overnight, but its still finding resistance at the mid 63 level.
The Pacific Peso remains under medium and long term pressure with price action just not being translated into anything sustainable as the four hourly chart shows momentum returning to neutral settings but nothing exciting as yet:
Oil markets are trying to shake off recent volatility but failed to break out again overnight, with Brent crude eventually pulling back below the $93USD per barrel level, putting in yet another lower daily high since the mid September levels.
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. Daily momentum is now above positive sessions with support clearly firming at those August levels so we could see a retest of the September highs at $94 plus soon:
Gold remains the best undollar by holding on to its position overnight after being extremely overbought from the weekend as it leads the undollars, holding at the new monthly high at the $1980USD per ounce level.
The daily chart shows quite a steep uptrend since the previous weekend gap higher as momentum remained very positive in the short term, trying to get back up to the $2000 level. This new breakout puts in a new monthly high with daily momentum now looking overbought and ripe for a pullback back to retest the $1900 level again, but so far no change as it builds above the $1970 level:
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