From Greg McKenna at GlobalFX, here’s your quick guide to the chatter on the Australian market this morning, where consumer inflation expectations and the RBA FX transactions might be interesting for the first time in a while.
– On Global FX markets it was a fairly quiet night with Euro (-0.02% @1.3258), Yen (USDJPY 98.10 -0.09%) hardly moving while the Aussie (0.9126) is up a little after finding support above the previous nights low in Asian trade yesterday. GBP was a bit stronger up after the MPC minutes and unemployment (7.8%) were released.
– In the US Stocks were off again as rates stayed elevated and concerns grow about the Taper. There is also a lot of talk about “The Hindenberg Omen” which you can find at BI here which is also weighing on sentiment in the US a little. At the close the Dow (-0.73% @15,338), Nasdaq (-0.42%) and S&P500 (-0.54% @1,685) were all lower while with the exception of the FTSE (-0.38) European stocks were all up between a quarter and half a percent.
– Europe is in a bad way. It has been for a while now but there has been a little bit of data recently that suggests that things are on the up. Citibank’s Economic Surprise index charts the G10 economies, the BRIC’s and emerging markets more broadly. It’s all about expectations and not absolute data outcomes, but what it shows is the underperformance of the emerging world relative to the developed. In this relationship you see why the Aussie dollar has continued to underperform even though the big economies are doing better. If our customers are in strife then by definition we are in strife too.
– I have started following a new approach to technical market analysis called iQuant on the Aussie Dollar. They do more than just the Aussie, spending a lot of time on stocks, but for me it is the Aussie that is of most interest. I was talking to Adam there yesterday and he noted that if 0.9080 was to give way then the Aussie was a shot duck – my words not his. The Aussie did indeed find support around the 80 zone with a low of 79 just a pip above the low of the previous day. I was short from the high 90′s and gave the Aussie a chance to break down but when it didn’t I covered my shorts. For the moment this level of 0.9080 remains key and the catalyst for a solid topside break seems lacking at the moment while the US dollar is the beneficiary of the taper talk support it is getting. I’ll probably be looking to sell at some point in the day to see where it wants to run to for the next day or so.
– One of the reasons I’m bullish about the US dollar and gold at the moment is because I reckon that stocks are due for a correction. There is a clear support zone in the past couple of weeks with a base around 1675. If stocks break, if this Hindenberg omen is real, half-real, or even just enough to get people to stop buying, then we are in for a retracement and the US dollar and gold are going to be the clear winners once more.
Have a great day and good hunting.
Greg’s on Twitter.