By Chris Becker
Remember to read “Trading Week“, which is normally published for free Saturday morning (but is moving to a new timeslot and format), to put these events and ideas in context.
In a day that saw a lot of moving and shaking – shake and bake! in the media sector, today was a big ole fizz on the ASX200 which launched on the open but trailed into the sunset, gaining only 9 points or 0.2% to 4132 points:
Excuse the candles, but you can see that the market is tenaciously hanging on to its gains above 4120 points from the breakout on Monday (above the higher orange horizontal line), but is still below the 50 day moving average (in pink) and of course the closely watched 200 day moving average (in black). We could be set for a further build on the breakout here, which is matching the build up in iron ore prices, which is matching the breakouts in BHP and RIO share prices. Indeed the other half of the ASX8, Megabank, also is breaking out:
Contrary to the Editor’s suggestion that the market did not approve of Delusional Economics investigations into the reality of what “who said, he said, she said”, I think the market was just following the mainland Chinese markets, which were in the green before lunch, but are now down across the board around 0.1 to 0.2% A long bow, but that’s the story I’m sticking too.
In other Asian markets, the Nikkei 225 was up over 1%, possibly on trade figures showing increased exports as the battered Japanese economy recovers. The Hang Seng is currently up 0.6% in contrast to the Shanghai Comp which is currently down 0.2% to 2296 points.
On currency markets, the Aussie remains just below 1.02, up about 30 bips since lunch and is hanging in there, waiting for the start of the European sessions. The Euro/USD cross is following in time and magnitude, climbing from 1.2665 to just under 1.27 holding on to last night’s gains. Thankfully my EURAUD short hedge continues to work having moved nowhere over the last 2 days. Might stop that out soon, as it looks like its stopping just above the 1.24 level:
The US Dollar Index (DXY) remains weak, and is just below 81.4 points..
Gold – still no move on – I reckon everyone is waiting for the FOMC meeting minutes release on Thursday morning our time before we see a break above $1630 or so. This is another trade I’ve got a VERY close eye on. If it fails to breakout above the current levels, it will likely slump back down to very strong support at $1525-1530 IMO:
In AUD terms (which for some reason is never noted in the financial press) gold is falling, now at $1589AUD per ounce – holders in AUD terms have seen no real move since early January by the way, but I think there’s a bullish bias here.
Finally, in the debt markets today, as I expected this morning, everybody ditched their favourite “cleanest shirt in dirty basket”, as Aussie 10 year yields exploded up nearly 15 basis points, now at 3.12%
This too looks set to breakout, particularly if we get above the 3.20% level. The downtrend looks broken…
Meanwhile bond markets have opened in Europe where on rumor only that Spanish and Italian bonds will be bought up by the ESM (which has next to no money, a minor point), yields are down around 10 basis points each on last nights gains. Huzzah, crisis over. Cough.
Tonight
Its the big boob tonight -the FOMC (Federal Reserve Open Market Committee – similar to our RBA monthly ice-vovo and tea board meeting to decide for the market what rates should be) concludes its two day meeting tonight, and will announce to world something something something….at or around 2.30am Thursday AEDT time. Hold on to your popsicles, we could be in for some volatility tomorrow morning!
Other data tonight is minor but important – UK unemployment for May, where consensus is expecting to hold at 8.2% – which I doubt very much. The Germans release their PPI figures for May, expecting another fall, this time around -0.3%, and if I’m not up by then (I think I’ll be working another all nighter tonight!) we get NZ GDP at 8.45 tomorrow morning with the market expecting a 0.4% print for the quarter, or 1.3% over the year.
You can find me on Twitter here
Disclaimer: The content on this blog should not be taken as investment advice. All site content, including advertisements, shall not be construed as a recommendation, no matter how much it seems to make sense, to buy or sell any security or financial instrument, or to participate in any particular trading or investment strategy. The authors have no position in any company or advertiser reference unless explicitly specified. Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Consult someone who claims to have a qualification before making any investment decisions.