Risk markets took their deep breath yesterday morning in reaction to the Trumpian Trade War but overshot as usual, with some mild recoveries overnight including Wall Street. Currency markets flocked to the USD but have recovered at least half of their respective movements with the Mexican turnaround or stay helping ease the volatility, although the crosses are still moving around quite a bit as international trade will no longer be dominated by USD flow. The Australian dollar came back sharply on news that their will be a stay on Canadian tariffs as well and is now back above the 62 cent level after almost crossing below the key 60 handle.
10 year Treasury yields also pulled back to the 4.5% level while trading in oil saw a reversal as well with Brent crude back down to the $75USD per barrel level. Gold however has succeeded in pushing above its recent new all time historical high to finish above the $2800USD per ounce level.
Looking at stock markets from Asia in yesterday’s session, where mainland and offshore Chinese share markets remain closed for the Chinese New Year.
The Hang Seng Index daily chart shows how resistance formed around the 21000 point level with only one false breakout in late November squashed back to the 20000 point level where price action has stayed since. This was setting up for another potential breakdown here as price oscillated downward but has turned into an impressive bounce – can it be maintained when markets reopen this week?
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Japanese inventory markets felt the warmth instantly with the Nikkei 225 ending almost 3% decrease at 38405 factors.
Value motion had been indicating a rounding high on the day by day chart with day by day momentum retracing away from overbought readings with the breakout final month above the 40000 level stage nearly in full remission. Yen volatility stays an issue right here, with a sustained return above the 38000 level stage from Could/June probably on the playing cards however resistance is firming:
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Australian shares additionally felt the brand new timewarp again to the 1930’s with the ASX200 closing some 1.9% decrease at 8379 factors.
SPI futures are up 0.4% regardless of the falls on Wall Avenue in a single day so count on extra volatility in right now’s session. The day by day chart sample and brief worth motion suggests resistance overhead on the 8300 level stage is beginning to weigh in the marketplace with an enormous push by way of required quickly to get again to the 2024 highs with momentum now getting fairly overbought:
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European markets in fact had falls throughout the entire continent, however they had been cushioned by the decrease Euro because the Eurostoxx 50 Index misplaced 1.3% ending at 5217 factors.
This was trying to flip into a bigger breakout with assist on the 4900 level stage fairly agency with resistance unable to breach the 5000 level barrier in latest months. Value had beforehand cleared the 4700 native resistance stage because it seeks to return to the earlier highs as momentum tries to select up strongly right here with the 5000 level stage turning into very sturdy assist:
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Wall Avenue really feel sharply at first however was capable of get well considerably nearer the shut with the NASDAQ shedding almost 1.2% whereas the S&P500 misplaced over 0.8%, ending under the 6000 level stage at 5991 factors.
Value motion had all of the emblems of a continuation under the 6000 level assist stage because the potential to overshoot and overreact to the FOMC assembly going into the NFP print subsequent week is constructing. This could have arrange a rally into the 6200 level space however may the primary stage of a pump and dump scheme:
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Forex markets are having the most important reversals as a result of “keep” on tariffs for Canada and Mexico with the violent hole downs towards a lot of the undollars now largely or a minimum of half recovered as of this morning. Euro gapped right down to the 1.02 stage earlier than heading again to the 1.03 deal with however continues to be effectively down on its Friday night time end.
The union forex not too long ago discovered overhead resistance on the 1.05 deal with however has deflated all week earlier than the Friday night time slam dunk into the mid 1.03 space as momentum accelerates to the draw back. Quick and medium time period assist continues to be below risk right here and requires a big transfer increased earlier than calling this over:
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The USDJPY pair had an identical trajectory to the opposite pairs with Yen firming in a single day after which simmering down with a sub 155 stage end this morning earlier than the Tokyo open.
Quick time period momentum was extraordinarily oversold earlier than the beginning of week bounce however requires worth motion to a minimum of recover from the 156 stage to name this a correct development increased for USD:

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The Australian greenback stays one of many largest casualties of the commerce conflict because the Pacific Peso gapped right down to the 60 deal with yesterday morning earlier than taking pictures again as much as the 62 cent stage on very latest information of the keep in Canadian tariffs.
The latest comply with by way of to the excessive 62’s and low 63’s was all the time excessive threat going into the stay February RBA price assembly and after the Trumpian tariff campaign so look ahead to a rejection of medium time period assist on the mid 61 cent stage this week:

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Oil markets slowed down from their latest retracement but in addition suffered a reversal of fortune inside the single day as Brent crude ending barely under the $76USD per barrel stage after breaking by way of $77, with some assist constructing right here because the advanced begins to soak up the potential for an vitality commerce conflict between the US and Canada.
The day by day chart sample reveals the publish New Yr rally that acquired slightly out of hand and now reverting again to the sideways motion for the latter half of 2024. I’m awaiting a possible new rally to kind above the $77USD per barrel stage from right here:

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Gold nevertheless is again on monitor after not too long ago working out of steam making an attempt to breach the $2800USD per ounce stage final week with a full closed above that stage as of this morning.
Value motion had been accelerating in confidence in early December as new ranges of assist had been being created no matter USD power however this pullback and rebound each had been combating an excessive amount of below the $2700 zone so I’ve been skeptical of any upside potential. Nevertheless that is trying extra attention-grabbing because the earlier weekly excessive is now surpassed though momentum is sort of overbought:

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Glossary of Acronyms and Technical Evaluation Phrases:
ATR: Common True Vary – measures the diploma of worth volatility averaged over a time interval
ATR Help/Resistance: a ratcheting mechanism that follows worth under/above a development, that if breached reveals above common volatility
CCI: Commodity Channel Index: a momentum studying that calculates present worth away from the statistical imply or “typical” worth to point overbought (far above the imply) or oversold (far under the imply)
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Low/Excessive Transferring Common: rolling imply of costs on this case, the high and low for the day/hour which creates a band across the precise worth motion
FOMC: Federal Open Market Committee, month-to-month assembly of Federal Reserve concerning financial coverage (setting rates of interest)
DOE: US Division of Power
Uncle Level: or cease loss level, a stage at which you’ve clearly been incorrect in your place, so cry uncle and get out/incorrect in your place, so cry uncle and get out!
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