ASX

Price action remains choppy on WTI crude oil's daily timeframe, which further backs up the case that last week's bearish reversal candle marked the beginning of a correction. The question now is how deep can it retrace before dip buyers seek to return in force? The ASX 200 has shown tentative signs of stability above 7,000, but given the bearish breakdown seen last week we prefer to seek bearish setups around resistance levels.

After threatening for weeks to generate a sizeable volatility event, the combination of higher bond yields and US dollar looks to have delivered.

At the most basic level the Fed delivered what was expected; another policy pause with the potential for further hikes. The opening paragraph tipped noted an economy which is “expanding at a solid pace” with a slower but “strong” job growth and elevated inflation. There’s nothing remotely dovish there. And then we look at the numbers…

An uneventful year for the ASX 200 could be about to get a lot more exciting with the index perilously close to breaking long-run uptrend support dating back to the start of the coronavirus pandemic.

Gold provided a false break and recovery bac above its 200-day EMA last week, and Monday's trade saw gold find support back above its 200-day MA. The ASX 200 handed back around half of Friday's gains, although there's a reasonable chance it might be able to find support around 7200 given the 200-day EMA resides in the area.

Australia’s August labour force survey had something for both AUD/USD bulls and bears, but in the end the detail does not meaningfully change the outlook for interest rates.

Bearish technical signals are mounting for Australian equities, pointing to the potential for additional downside beyond that already seen.

With the RBA on the sidelines, it means external factors will continue to drive movements in the AUD, ASX 200 and Australian bond futures for the foreseeable future.

USD/JPY bulls seem intent on goading the MOF and BOJ into verbal or actual intervention, as the market rises back to last week's multi-month high with rising yields supporting the move. The question now is whether we'll hear an increase of comments from officials if or when we break above last week's high. For now, USD/JPY looks as though it at least wants to retest it.

It was not the best week for Australian markets, with the ASX 200 suffering its worst week in nearly a year and AUD/USD trading lower for a fifth consecutive week (its first such bearish sequence since October). Today’s question is whether we’ll see a reprieve and if Beijing will unleash the vast amounts of stimulus investors are clearly craving.

Unemployment jumps unexpectedly diminishing the risk of a wage price spiral forming.

Hawkish FOMC minutes caught markets by surprise which saw US bond yields and the USD continue to rise and sending Wall Street lower for a second day. Whilst spot gold closed beneath 1900, futures have not - so perhaps support awaits). USD/JPY is soaring higher despite a warning from the MOF. And now the ASX reached my first bearish target, I’m now wondering if it can it reach for the second.

It was a risk off tone to the start of the week following dire loan data from China over the weekend. AUD/USD briefly traded to a fresh YTD low and the ASX fell out of its bearish bed ad closed below 7300 for the first time in a month. The question now is whether key support levels will hold and appetite for risk will be restored, or something bigger is cooking?

AUD/USD may only be a day or two's trade away from testing (or even breaking) its YTD low set in May. And if price action on NZD/USD is anything to go by (which saw the Kiwi dollar break its own YTD low on Friday), we could be looking for AUD/USD to move towards 64c.

The annual rate of US inflation rose expanded at a faster rate for the first month in 13 at 3.2% y/y, although it was beneath the 3.3% forecast. Prices also rose 0.2% as expected. The initial reaction was one of relief that inflation was not rising above expectations, with Wall Street rallying and the US dollar falling to help the likes of AUD/USD and EUR/USD rise momentarily after the release. But once the dust had settled and investors remembered that inflation still remains well above target, the US dollar regained its strength and Wall Street traded lower.

USD/JPY is back to levels where the BOJ intervened last year but that doesn't mean it will do so again.

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