Gold, ASX 200 Analysis: Asian Open – 28th June 2023

Market summary

• US consumer confidence rose to a 17-month high according to the Conference Board survey
• Whilst the expectations index remains just below 80 (a level associated with a recession within a year) there were many positives behind the headline number
• Home sales rose 12.2% m/m despite higher rates, as the housing sect continues to show sign of improvement (which is a potential boost for the US economy)
• Wall Street lifted itself from its lows led by the Nasdaq 100, although the S&P 500 managed to break above Monday’s high after finding support at the August 2022 high on Monday (break above 4,400 seems feasible)
• USD/CAD printed a bullish engulfing day major thanks to Canada’s inflation falling below expectations, with bets of another BOC hike being trimmed
• USD/JPY rose to a fresh 7-month high and tapped 144 in line with yesterday’s bullish bias thanks to improved risk sentiment and stronger US economic data (although traders need to keep an ear our for comments on yen volatility from Japan’s Ministry of Finance
• EUR and GBP strongest, JPY and CAD weakest
• Australian inflation data at 11:30 AEDT is the key event on today’s Asian session, and Canada’s softer inflation numbers provide some hope that we’ll see a faster rate of disinflation here. But an upside risk for Aussie pairs is if inflation sticks too close to last month’s 6.8% figure. A reading below 6% would be a much-welcomed surprise, even if it is elevated by historical standards.
• AUD/USD rallied and stopped just shy of 0.6732 resistance before reversing lower to form a bearish pinbar day, a break beneath the 0.6665 low brings the 0.6660 – 0.6624 support zone into focus
• Tonight we have a policy panel between central bank leaders from the Fed, ECB, BOE and BOJ. Whether it will simply be a fireside chat or something more potent remains to be seen but is something we all need on our radars in case it sparks volatility.

Events in focus (AEDT):

• 11:30 – Australian inflation report (6.1% y/y expected, 6.8 previously)
• 11:30 - China’s industrial profits YTD
• 23:30 – Fed Chair Powell, ECB President Lagarde, BOJ Governor Ueda and BOE Governor Bailey speak on a policy panel

ASX 200 at a glance:

• The ASX 200 snapped a 4-day losing streak
• Whilst its bullish day was underwhelming, it has a positive lead from Wall Street and seems likely to bounce further from its cycle lows
• Intraday support: 7078, 7100
• Intraday resistance: 7146, 7150, 7167-75

Gold 4-hour chart:

Gold remains within an established downtrend on the 4-hour chart, although a potential double bottom has formed around $1910 whilst RSI (2) dipped into the overbought zone to warn of a near-term bounce. A move to $1920 seems feasible, a break above which brings $1932 into focus. However, we see signs of weakness below $1920 after an anticipated technical bounce, we’d look for a potential swing trade short for a retest (and potential break beneath) $1910 for a move to the $1900 handle.

Further out, keep in mind support levels on the higher timeframes which could support prices above $1900, and the fact that July is generally the least volatile month of the year.

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge