Asian Open: AUD/JPY falters at 82.00, AU retail sales up next

US Friday close:

• The Dow Jones fell -21.46 points (-0.06%) to close at 35,089.74
• The S&P 500 rose 23.09 points (0.52%) to close at 4,500.53
• The Nasdaq 100 rose 193.239 points (1.33%) to close at 14,694.35

Asian Indices:

• Australia’s ASX 200 index closed at 7,120.20 on Friday
• Japan's Nikkei 225 index closed at 27,439.99 on Friday
• Hong Kong's Hang Seng index closed at 24,573.29 on Friday
• China'sA50 Index closed at 14,769.78 on Friday

European Friday close:

• UK's FTSE 100 index fell -12.44 points (-0.17%) to close at 7516.4
• Europe'sEuro STOXX 50  index fell -54.44 points (-1.31%) to close at 4086.58
• Germany's DAX  index fell -268.91 points (-1.75%) to close at 15099.56
• France's CAC 40 index fell -54.25 points (-0.77%) to close at 6951.38

ASX 200: Energy and utility sectors continue to outperform.

The ASX 200 closed above 7100 for its first time in eight sessions, and that it was seen on above average volume is encouraging for the bull-case. The December low of 7145 is a key level for bulls to conquer if this rebound is to have any legs.

Energy and utilities sectors continued to outperform the broader market last week, rising 4.9% and 4.5% respectively compared to the ASX 200’s 1.9% gain. Over the past month the sectors have climbed 9.5% and 6.9%.

ASX 200: 7120.2 (0.60%), 04 February 2022

• Industrials (1.15%) was the strongest sector and Telecomm Services (-0.01%) was the weakest
• 10 out of the 11 sectors closed higher
• 1 out of the 11 sectors closed lower
• 7 out of the 11 sectors outperformed the index
• 50 (25.00%) stocks advanced, 138 (69.00%) stocks declined

Outperformers:

• +6.21% - AVZ Minerals Ltd (AVZ.AX)
• +6.18% - Liontown Resources Ltd (LTR.AX)
• +4.85% - Qantas Airways Ltd (QAN.AX)

Underperformers:

• -2.06% - Boral Ltd (BLD.AX)
• -0.76% - Vanguard Total Stock Market Index Fund (VTS.AX)
• -3.61% - ARB Corp Ltd (ARB.AX)

Last week was the dollar’s most bearish week of the year

The US dollar was the weakest currency last week. In fact, it was the most bearish week for the US dollar index since November and resulted in a prominent bearish engulfing candle on the weekly chart. The combination of Fed members playing down the prospects of a 50 bps hike alongside a refreshingly hawkish ECB meeting weighed heavily on the index. And that earned top spot for the euro which rose and impressive 2.7%.

It was a mixed week for the Australian dollar which saw it hand back most of its early week gains over Thursday and Friday. And this is despite domestic bond yields rallying into the weeks end.

In today’s calendar AUD traders will be keeping an eye on job ads and retail sales at 11:30 AEDT. Job ads fell by -5.5% in December due to the surge in coronavirus so it would be good to see a rebound at the start of the year. Q4 retail figures are also released and, if January’s monthly read is anything to go by, we could see it improve upon Q3’s -4.4% contraction.

AUD/JPY falters at 82 yen

Its pullback from the January low met resistance at the 50% retracement level to the YTD high, descending trendline and 50-day eMA on Thursday before bears drove it back below 82.00 on Friday. It wasn’t quite a bearish engulfing candle but it does point towards a swing high at 82.28.

The four-hour chart shows a bearish engulfing candle roll over at the 200-day eMA and close beneath the monthly pivot point, and the 50-dar eMA has since capped as resistance. Should prices remain below 82.00 then we are simply waiting for a break beneath the 81.28 low to suggest bearish trend continuation.

Oil closes at a 7-year high

It was another strong week for oil prices which has also prompted further calls for the famous $100 level. WTI has rallied over 330% since the March 2020 low, 49% of which has been seen over the past nine weeks. Should bulls maintain current levels of volatility and direction it could reach $100 within two weeks.

Net-long exposure to gold fell at its fastest weekly rate in nearly 2 years.

Elsewhere for commodities, gold grinded higher during a choppy week of trade, yet its rally appears underwhelming when compared with its fast fall from grace around $1850. It’s also worth noting that net-long exposure to gold futures fell by -48k contracts last week – it’s fastest weekly fall in nearly three years. And as the fall in net-long exposure was fuelled by the combination of new short positions and closure of longs we retain the view that gold could face further selling pressure this week. And all it could take is a stronger US dollar. 

Up Next (Times in AEDT)

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