Macro Afternoon

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by Chris Becker

An undershot by Australian 2Q CPI sent the Aussie dollar down below 79 cents against the USD which sent domestic stocks higher, as the good mood from overnight markets continued with the rest of Asia. A rally in commodities has helped as well, spurred by a rebound in oil prices as the Saudi’s look to cut exports.

In mainland China the Shanghai Composite finished down a few points after a very steady trading session, off 0.15% to 3238, still above previous resistance, now support at 3200 points. The Hong Kong based Hang Seng Index is doing a fair bit better, up 0.3% to be at 26922 points, making good on its recent breakout above 26,000 points. There is room here for a retracement as daily momentum reverts to mean and a series of stalled new session highs is points to a longer pause:

Japanese stocks are doing better on the back of a lower Yen in overnight trade, but this was nullified a little by no further weakness in the Asian session. The Nikkei finished up 0.4% to finish just above its psychological important 20,000 point level which is proving elusive to break through. The USDJPY pair is hovering just below the 112 handle as all and sundry await tonights FOMC meeting:

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S&P futures are flat as earnings, FOMC, OPEC and others weigh in on what should be a big session tonight:

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The ASX200 is making good on the poor CPI print and the rise in commodity prices with both houses and holes lifting, sending the bourse up nearly 1% higher to 5776 points. Bank stocks were up around 1% with BHP and RIO putting in 3% or so daily gains.

The Aussie dollar however has broken down on the undershooting CPI print, falling below the lower end of the rectangle pattern on the hourly chart, now below the 79 handle proper against USD. This sets up for a potentially much bigger reversal tonight as The City weighs in and then the FOMC:

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The data calendar continues with the big event being the FOMC meeting, but there’s also UK GDP figures for the 2Q, a DOE oil inventory report and new home sales in the US.