Aussie dollar crushed again as US stocks rally

November 25, 2013

Glenn Stevens will be pleased with himself and the jawboning he has given the Aussie dollar over the past 6 weeks or so but the primary focus for traders around the world at the moment will the huge weekly close we saw on Friday in New York with the S&P 500 and Dow ending the week above 1,800 and 16,000 respectively for the first time in History. The Dow finished at 16,065 up 0.34% while the S&p 500 finished at 1,805 up 0.51%. The Nasdaq closed at 3,992 just 8 points off a weekly triumvirate of historic levels – 1,800, 4,000 and 16,000.

There is still plenty of wariness about this market and I am short SPI and S&P at the moment there remains more bullish momentum and a capitulation amongst the bears. So who knows how far this market will run until traders start to concentrate on the December 17-18.

In London the market was much more subdued with the FTSE finishing down 0.11% at 6,674. The DAX was up 0.25% to 9,219, while the CAC was 0.59% higher. In Milan stocks fell 0.11% while in Madrid they rose 0.81%.

On the Sydney Futures Exchange the December SPI 200 contract finished up 23 points to 5371 bid.  The SPI 200 has rallied off support but is still vulnerable. Last week the SPI 200 broke lower but came back with the S&P 500 last week off the bottom of the more recent uptrend within the overall big uptrend.

It has been a very solid bounce from the lows below 5300 and while the outlook is mixed we are still short with a stop way above the market at present – above the recent high.

My system suggests a longer term chance of a big fall in the SPI 200 – like our gold call from this time last year.

Time will tell.

On Forex markets the stronger than expected German Ifo data which showed improvement in conditions, climate and expectations helped drive the Euro up to 1.3556 close. Sterling is back above 1.62 closing at 1.6224 and USDJPY pushed higher as well up to 101.24 at the close.

Something else worth noting over the weekend were comments from German Finance Minister Schaeble that Europe no longer has any contagion risks and that Greece has done a solid job over the past 18 month’s. True most likely but instead of contagion looks like it might now face deflation.

The Aussie’s sell off continued and it closed under intense pressure at 0.9166 and a full retracement back under 89 cents. Glenn Stevens has been important in turning the tables on the bulls and it still seems that the Aussie is heading toward 88 cents.

As we mentioned Friday the 91 cent zone was the target on the day and the Aussie made a low of 0.9142.

The head and shoulders pattern is still valid as discussed on Friday but for the moment the 1 and 4 hour timeframes are heavily oversold and so we are expecting a bounce initially before the Aussie heads lower once again.

On commodity markets gold was largely unchanged at $1243, Crude rallied a little up 0.63% to $94.72 Bbl and copper is back at $3.23 lb. Corn and Wheat were largely unchanged but soybeans rose 2.17%. Bitcoin traded up near 900 again over the weekend and sat at 760 last night and is now 835 at time of writing.

On the data and speech front its a holiday in Japan today but BoJ Governor Kuroda is talking anyway, ECB Member Noyer is speaking as well as is RBA deputy Governor Lowe. In the US pending home sales and Dallas Fed will be released.

Have a great day and good hunting

Greg

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