Aussie Dollar, Gold and SPI200 pressured

September 13, 2013

Lets start with the Aussie this morning and its aborted move to 96 cents after the reversal on the back of the weaker than expected Australian Employment data.  the Australian Dollar was the big loser dropping from a high of 0.9353 just before the Employment data (-10,800 versus +10,000 expected) to a low of 0.9225. It sits at 0.9270 at the moment.

The selloff came very swiftly and there is no getting away from the ugliness of the last candle you can see on the daily AUDUSD chart above. It has certainly changed the outlook for the Aussie in the very near term and the 4 hour chart below actually suggests further downside might still be in the offing.

The low last night of 0.9225 is the key support on the downside, then 0.9175.

In the run up to the FOMC meeting next week and expectations that thee FOMC WILL Taper the chances of the Aussie breaching the range top before then and with the RBA minutes out next Tuesday the Aussie is more likely to trade a range with a downside bias than break higher now.

Any call to 96 cents is thus on hold unless or until a topside break eventuates.

In other markets there was more positive news on Syria reducing the chances of a strike on Syria to almost zero (at the moment) as the Assad regime moves toward compliance with the global chemical weapons bans. But the only impact this appears to have market wise is that gold has crashed $41 or 3% to $1322 as fear washes out of the market and important technical levels were breached.

It is clear that much of golds rally was about the Syria tensions and it is now sitting on the last line of support before a dip toward $1275.

$1275 should be solid support.

The other key theme running through the markets appears to be an expectation that the Fed will taper next week after the FOMC meeting but that the taper will be small, $10 billion, and cautious and come with solid guidance on lower rates for longer. This helped US 10 year treasuries rally back to 2.92%, UK Gilts fell 6 basis points to 2.77% and in Germany Bunds fell 5 basis points to 1.95% as European industrial production disappointed with a fall of 1.5% in July against expectations of a 0.1% rise.

This weak European data knocked the Euro against the Yen and the pound the latter of which is at almost 8 month lows but against the USD the Euro at 1.3297 is only off marginally.

On the US stock market the focus does seem to have turned to the FOMC meeting and the run of rallies has ended. Jobless claims overnight was much stronger than expected at 292,000 down 30,000 from the previous week but some processing problems have lessened the impact which would have been of a big uplift in expectations of a tough taper otherwise.

At the close the Dow fell 26 points to 15,301, the Nasdaq fell 0.24% and the S&P 500 was 6 points lower at 1693. In Europe the FTSE eked out a 0.01% gain but the DAX, CAC and FTSE MIB were all down

On the Sydney futures exchange the SPIS200 contract is down 12 points.

You can see in the chart below that yesterday the SPI hit resistance at the range top and like the Aussie has reversed. Weaker employment and focus on the FOMC mean it will take further rallies offshore to kick the market higher. Expect some consolidation first.

Support 5159 and 5125/35.

On Commodity markets as noted gold tanked but oil was a bit higher rising 1.07% to $108.71, Silver fell 4.42%, Copper dropped 1.42% to $3.21 lb., and the Ags moved around again with Soybeans up 2.62%, Wheat rose a little more than 1% and Corn fell 1%

On the data front NZ Business PMI and ANZ NZ Business confidence, unemployment and retail sales in Singapore, IP in Japan, EU employment and trade and then US PPI, retail sales and business inventories.

Have a great day and good hunting

Greg

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