24.07.53 Macro Morning
Chris Becker | Jul 24, 2023 08:34
Friday night saw Wall Street nominally put in a strong final session for the week with the Dow advancing for the 10th session in a row, but it was all relative as the broader S&P500 remains stalled as the earnings seasons gets underway. A slew of macro releases this week, culminating in the triple whammy FOMC/ECB/BOJ meetings, will keep the rest of the risk complex on its toes. The USD remains strong against the majors going into this week with the Australian dollar back down to the 67 cent level despite the recent strong employment print.
US bond markets saw a small drop across the yield curve with the 10 year back to the 3.8% level while oil prices again rallied on European macro concerns with Brent crude advancing beyond the $80USD per barrel level. Gold tried to hold on but fell back towards the $1960USD per ounce level.
Looking at share markets in Asia from Friday’s session with mainland Chinese share markets still in deflation mode with the Shanghai Composite finishing dead flat at 3171 points while in Hong Kong the Hang Seng Index had a successful rebound after its recent selling, up nearly 0.8% to 19075 points.
The daily chart is still showing how strong that 19000 point level remains as a point of control below the dominant downtrend (sloping higher black line) as confidence is trying to clawback here after almost touching the May lows. A possible breakout was brewing but has lost momentum as price action remains stagnant:
Japanese stock markets continued to deflate with the Nikkei 225 closing more than 0.5% lower at 32304 points.
Trailing ATR daily support has paused for sometime now as the market has been going sideways after a big lift recently, with a welcome consolidation above that level. Daily momentum has retraced from overbought to slightly negative settings with this retracement down to the support zone possibly not yet over, as we watch for a possible breakout on any weakening Yen trend:
Australian stocks were able to put in another flat session to end the week, with the ASX200 closing 0.1% lower at 7313 points.
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SPI Futures are up 0.4% despite a flat run on Wall Street from Friday night, which should again test the 7300 point level which has firmed as short term resistance. Medium term price action remains on a downtrend with the daily chart just oscillating further down despite this continued bounce. Resistance overhead at the 7200 to 7300 point zone is the area to really watch with the June highs under threat next as this reflation rally looks like rolling over:
European markets were able to extend their recent gains as Euro remained low with the Eurostoxx 50 Index gaining nearly 0.4% to just remain under the 4400 point level, closing the week at 4391 points.
The daily chart showed this potential bull trap building even though weekly support at 4200 points had been continually defended, with weekly resistance at the 4350 points level the actual area to beat. Support has been broadly defended at 4200 points, touched three times now in as many months but the 4400 point resistance level is again firming so I remain wary on the short term Euro weakness:
Wall Street was again all over the place with the Dow up for the 10th time in a row – but only just – while the NASDAQ lost nearly 0.3% while the S&P500 was dead flat, finishing at 4536 points.
The four hourly chart shows the two week rally from the 4400 point low technically over with resistance quite firm at the 4500 to 4600 point zone, but not yet rejected. Watch for a potential short term retracement below the 4550 area as the earning season continues:
Currency markets are firming more and more to USD as traders await this week’s triple whammy of the Fed, BOE and BOJ all potentially moving around the crosses.
Euro remains on a small decline due to hitting resistance above the 1.12 handle all week but has broken through trailing four hourly ATR support back down to the 1.11 level. Watch for this test of support to now drop below the 1.11 level:
The USDJPY pair was able to find more life with a stronger USD pushing Yen lower despite domestic inflation concerns as it pushed back above the 141 handle following an epic selloff in the previous week.
Four hourly momentum is still looking overcooked to the upside here with the return well below the June lows at the 140 level providing a firmer support level. This now stronger bounce has pushed through short term ATR resistance and could swing higher:
The Australian dollar zoomed up through the 68 cent level on the recent unemployment print but has been unable to push above trailing short term resistance as the USD firmed against everything, with the Pacific Peso pulled straight back down to the 67 handle.
Recent price action put ATR resistance and 200 EMA (black line) levels under threat but short term momentum remains negative here without upside potential building. Watch for a breakdown below the 200 EMA next:
Oil markets had been reverting to mean somewhat in the wake of macro factors in Europe with another strong lift higher on Friday night on OPEC+ machinations saw Brent crude push through the $80USD per barrel level to firm up short term support.
Price had been anchored around the December levels – briefly dipping to the March lows – with the latest move matching the small blip higher in May and now trying to get above overhead resistance at the $80 level. Daily momentum has picked up strongly into overbought readings with price action now clearing the last couple months of resistance and setting up for a new potential uptrend:
Gold had been helped along by the weaker USD in the previous trading week after recently threatening to rollover through the $1900USD per ounce level, but was unable to hold on to its most recent advance as it retraced back below the $1960 level on Friday night.
The four hourly chart showings this attempt at getting back up to the psychologically important $2000USD per ounce level, but it seems the $1960-70 zone remains a point of control at least in the short term with price action looking like reverting back to the $1900 level first:
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