26.10.23 Macro Morning
Chris Becker | Oct 26, 2023 09:42
Last night saw bond markets pushing the rest of the risk complex around with a rise in yields sending Wall Street down alongside commodities as the USD returned somewhat to strength. The NASDAQ led the selling on Wall Street while European shares were relatively flat, but futures are indicating more downside for Asian equities on the open.
US bond markets saw a lift across the curve with 10 year Treasury yields back through the 4.8% level while oil prices lifted slightly after their recent sharp reversal, with Brent crude gaining nearly 2% to the $90USD per barrel level. Gold consolidated to the upside but remains anchored near the $1980USD per ounce level.
Looking at share markets in Asia from yesterday’s session mainland Chinese share markets lifted again with the Shanghai Composite closing 0.4% higher at 2974 points while in Hong Kong the Hang Seng Index losing some 0.5% to finish at 17085 points.
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 were able to build on their recent stability with the Nikkei 225 closing some 0.6% higher at 31269 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 a move lower on the open as I’m still watching for a return to the previous monthly low at 30000 points proper:
Australian stocks were the odd ones out with a scratch session for the ASX200, which closed at 6854 points, still unable to get back above the 7000 point level that was broken last trading week.
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Without relief across the risk complex, SPI futures are indicating a 0.3% drop on the open this morning with the 7000 point level still 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:
European markets tried to re-engage to the upside with only minor returns with the Eurostoxx 50 Index eventually gaining 0.2% to finish at 4073 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 somewhat stable at first but then sold off fast with a new low across the three bourses as the NASDAQ cracked more than 2.5% lower while the S&P500 took back all its recent bounce and then some more for a new monthly low, finishing 1.4% lower at 4186 points.
The daily chart is showing a clear downtrend with a series of lower weekly lows with another one created overnight. Short term momentum was getting out of oversold territory as price action firmed near this new low, but the potential swing trade evaporated so watch for another pullback soon:
Currency markets remain in a volatile mode in the absence of strong economic data with another lift in USD strength out of nowhere overnight sending Euro well below the 1.06 handle.
On the four hourly chart the union currency had finally broke through short/medium term resistance at the 1.06 handle at the start of the week, 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 but is going to be tested here:
The USDJPY pair is now lifting out of its holding pattern on the return of USD strength to finally push above the 150 handle and a new weekly high, after a brief pull back to trailing ATR support.
Four hourly momentum shows a return to well overbought settings after a proper test of support at the 149 level with the floodgates potentially open from here:
The Australian dollar was again dragged back to the 63 handle after a brief bounce that almost saw it lift through the 64 cent level but resistance is just too strong here again.
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 the potential to drop lower but I think traders are awaiting next week’s RBA meeting:
Oil markets are failing to shake off recent volatility with a reversal overnight, gaining over 2% as Brent crude returned to just below the $90USD per barrel level, after a series of lower daily highs 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 back to negative settings with a retest of support at the August level, so watch for a possible slump to the $84 zone soon:
Gold remains the best undollar by holding on to its strong position overnight after being extremely overbought from the weekend as it continues to lead 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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