Aussie remains under pressure as confidence tanks and AUDJPY weighs

May 21, 2014

The Aussie remains under pressure this morning after losing around 130 points already this week.  The key is the looming budget impasse and the solid impact that the budget has had on consumer sentiment which is likely to hit domestic consumption and hit it hard.

Looking this morning it seems that the weight of the negatives is being aided by the strength of the Yen which is adding to the pressure on the Aussie as you can see in the AUDJPY chart below.

The 200 day moving average at 92.88 has to be the target  with a break opening up another 100 point fall.

Looking at AUDUSD directly we see a similar story.

A test of the 200 day moving average and into the 0.9150/70 region appears likely.

Turning to the overnight markets and it was a continuation of the topsy turvy trade pattern of up one day and down another as stocks in the US are trapped in a fairly tight trading range. Last night weaker than expected results from staples helped push retailers down leading the market lower. Also hitting stocks was Philly Fed President Plosser intimating rates need to rise “if not now, then relatively soon”

In the end the Dow fell 138 points or 0.83% to 16,374, the Nasdaq fell 0.7% to 4,097 and the S&P 500 dropped 12 points or 0.64% to 1,873.

In Europe markets were lower but also proved the disconnect between reality and price action with Credit Suisse stock up 1% after the $2.5 billion fine in the US. Clearly this suggests that the stakes are so high that even a fine of this magnitude is acceptable. Anyway enough editorial in the end the FTSE fell 0.62% to 6,802, the DAX fell 0.21% to 9,639 and the CAC 40 fell 0.4% to 4,452. In Milan and Madrid stocks went the other way rising 0.3% and 0.27% respectively.

All of which leaves the local market under more pressure after the late day surge which turned a negative day on the ASX into a win. Overnight however the June SPI 200 contract is down 29 points to 5400 bid. We’ll see how the market goes today.

On currency markets the Aussie is down as noted above while the Yen is down at 101.27 and resting on the very important 200 day moving average and looking vulnerable. Euro is stuck around 1.37 and the pound sits at 1.6839.

Turning to commodities may Nymex crude is roughly unchanged at $102.51 Bbl, Gold sits at $1,290 oz, silver is up 0.23% to $19.37 oz while copper sits at $3.16 lb. The Ags were lower with corn down 0.79%, wheat 0.70% lower and soybeans down 1.16%.

On the data front today the Westpac Consumer Sentimnet data is due out and will be vitally important for local markets. The survey was taken after the budget and following on from the big fall in the ANZ Roy Morgan release yesterday a big drop is expected.

Tonight we get the details of the recent BoE meeting with the release of the minutes. EU current ccount is also out along with EU confidence. In the US we get the minutes from the FOMC meeting recently and a raft of fed speak including Fed Chair Janet Yellen

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