By Chris Becker
What’s the RBA thinking? Because if they wanted to keep a floor under the AUD they’ve achieved it in spades by holding today – the “battler” leaped almost 1% on the rates hold decision, another reason why you shouldn’t conflate short term gyrations with longer term fundamentals. Aussie stocks went nowhere in response – see the table below and for technical analysis of the ASX200. Chinese markets were all off today, with the Hang Seng down 0.5% and the Shanghai Composite falling over 1%, the Japanese markets also a bit wobbly trying to gain some direction before the US presidential election which is tonight.
Here’s a daily chart of the Aussie (AUD/USD) which has has now broken out above resistance and remains on trend possibly going as high as 1.06 in the coming weeks before the December rate decision:
Remember there’s two sides to a currency and the US Dollar has been firming up in recent weeks and has had a tentative short term breakout on the US Dollar Index (DXY) . This is reflected in undollar – gold (USD) although it rallied almost $10USD per ounce in the last 24 hours, it still remains under a lot of pressure. We await the election – for mind, I don’t think it matters long term for gold who’s in the White House, but the volatility if Romney is elected will be epic…
Australian Stocks
Rio Tinto (RIO) was pipped at the post today as 2nd place in ASX8 (the top four banks and miners) today, up 1% and above overhead resistance – are we seeing a breakout with the materials sector?
Let’s hope so because if the financials sector falls over after 3 banks go ex-dividend Thursday and Friday, the materials better take up the reins or the ASX200 – which is 40% financials – might go for a bit of a tumble…For now there’s been a trendline break, but not support at 4440 points:
We await the US Presidential elections, the RBA meeting, the vibe etc etc…
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Chris Becker is an investment strategist at Macro Investor, Australia’s leading independent investment newsletter covering stocks, trades, property and fixed interest. A free 21-day trial is available at the site.
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