Asian Open: Dollar Dominance Continues as Bearish Bets Scramble for the Exit

It was another volatile session with most markets far exceeding their average daily ranges. Yet it’s the dollar’s sharp reversal that that is turning the most heads.

Charts (5)


Asian Futures:

  • Australia's ASX 200 futures are currently flat, the cash market is currently estimated to open at 7,359.00
  • Japan's Nikkei 225 futures are up 130 points (0.45%), the cash market is currently estimated to open at 29,148.33
  • Hong Kong's Hang Seng futures are up 92 points (0.32%), the cash market is currently estimated to open at 28,650.59

UK and Europe:

  • UK's FTSE 100 index fell -31.52 points (-0.44%) to close at 7,153.43
  • Europe's  Euro STOXX 50  index rose 6.38 points (0.15%) to close at 4,158.14
  • Germany's DAX  index rose 17.1 points (0.11%) to close at 15,727.67
  • France's CAC 40 index rose 13.61 points (0.21%) to close at 6,666.26

Thursday US Close:

  • The Dow Jones Industrial fell -210.22 points (-0.62%) to close at 33,823.45
  • The S&P 500 index fell -1.84 points (-0.05%) to close at 4,221.86
  • The Nasdaq 100 index rose 180.797 points (1.29%) to close at 14,163.81


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Nasdaq hits a record high

Overall, it was mixed across equities with the S&P 500 falling briefly below 4200 before effectively closing flat and forming a Rikshaw man Doji back above the 20-day eMA. And the Nasdaq went one better to close to a new record high (which is not exactly screaming bear-market territory). Russell 2000 and Dow Jones however closed lower by -1.18% and -0.62% respectively.

The ASX 200 fell to a two-day low and confirmed Wednesday’s bearish hammer and took prices back inside the upper Keltner band. Support was found above the 7334 high and yesterday’s low perfectly respected trend support projected from the May low. So, is that it? Perhaps, given the mixed response on Wall Street. We therefore have a neutral bias for today’s session, although a break beneath 7335 suggests the correction is to extend.


ASX 200 Intraday S/R

  • R4: 7400 - 7406.20
  • R3: 7392.60
  • R2: 7384 - 7386
  • R1: 7377
  • Pivotal: 7364.5
  • S2: 7350 - 7352
  • S3: 7335 - 7342
  • S4: 7312 – 7314
  • S5: 7300 - 7302


ASX 200 Market Internals:


ASX 200: 7359 (-0.37%), 17 June 2021

  • Information Technology (1.26%) was the strongest sector and Telecomm Services (-1.94%) was the weakest
  • 7 out of the 11 sectors outperformed the index
  • 61 (30.50%) stocks advanced, 137 (68.50%) stocks declined
  • 14 hit a new 52-week high, 0 hit a new 52-week low
  • 72% of stocks closed above their 200-day average
  • 65.5% of stocks closed above their 50-day average
  • 68% of stocks closed above their 20-day average

Outperformers:

  • + 6.15%   -  Nuix Ltd  (NXL.AX) 
  • + 5.20%   -  Netwealth Group Ltd  (NWL.AX) 
  • + 4.81%   -  Computershare Ltd  (CPU.AX) 

Underperformers:

  • -11.5%   -  Whitehaven Coal Ltd  (WHC.AX) 
  • -7.89%   -  Redbubble Ltd  (RBL.AX) 
  • -7.57%   -  Northern Star Resources Ltd  (NST.AX) 


Forex: Dollar bears caught with their (short) pants down

This almost goes without saying, but the US dollar was again the strongest currency overnight. And bears being caught with their (short) pants down likely explains it. Heading into this week’s FOMC meeting, traders were net-short USD against G10 currencies by -$18 billion dollars according to data from the CFTC. So that is a lot of bears currently trapped against an aggressively rising dollar which need to be covered and inadvertently add fuel to a now bullish fire.

The SNB (Swiss National Bank) raised their inflation forecasts yet said they will keep policy ‘loose’. Keep I mind this is the same central bank that said it wouldn’t remove the peg to the euro three days before they did in 2015. But the time seems opportunistic as long bets on the Swiss franc are unravelling as bears scramble to cover their USD shorts, taking pressure off of a rising CHF. USD/CHF rise 1% overnight, taking its post-FOMC gains to 2.4% and now sits at a two-month high.

AUD/JPY hit our 83.04 target after yesterday’s high respected the broken trendline resistance before rolling over during its most bearish session in two months. With the BOJ meeting coming to a conclusion in less than two hours, one has to wonder when talk of the currency will come into play or whether the Minster of finance will warn they are watching volatility levels to fend of yen bulls.

A bullish pinbar formed on EUR/AUD which respected 1.5690 support and formed a higher low on the daily chart. Our bias remains bullish above the 1.5659 low with the initial target being the 1.5851 high.


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Gold liquidates itself, copper closes below key support

Gold prices have seemingly shown themselves the door and it continue to sell-off in spectacular fashion. The sell-off in gold has been nothing short of severe, falling a further -$47 dollars and slicing through key support at 1797 support like butter. Momentum is now waning around the 1770 low so, if today’s Asin session is a repeat of yesterday we may see profit taking (minor bounce) before bears target 1756 at a subsequent session.


Copper futures closed beneath the October trendline and 100-day eMA highlighted in yesterday’s video. There was only a minor bounce at trend support before bears regained control, so our bias remains bearish beneath yesterday’s high (or somewhere along the bow defunct trendline). $4.00 is the next obvious target for bears, so we’ll seek bearish setups at or around resistance or bearish continuation patterns on lower timeframes.


Up Next (Times in AEST)


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