Aussie vulnerable still as Taper talk dominates, Can the SPI break out?

September 16, 2013

It is going to be all about the Taper this week, well at least until we get the FOMC decision at 4 am Eastern Standard time on Thursday morning. There is a lot of market time between then and now and in Australia we have the release of the RBA Board minutes at 11.30am Tuesday to contend with as well.

Trade is potentially going to be thin and whippy

But at least the week should start with a decent tone in stocks coming from Friday night’s trade in the US and Europe and it seems markets reckon they know what the Fed is going to do and are content it is nothing radical. While no one knows exactly what they will announce the market does seem to have settled on a small taper of say $10 billion and clear guidance that rates will stay low for a while yet.  So stocks rose in the US with the Dow, S&P and Nasdaq all higher finishing 0.49%, 0.16% and 0.27% in the black respectively

In Europe the FTSE was marginally lower on Friday but still had a positive week while the DAX, CAC, FTSEMIB and IBEX were all higher but no gain was more than 0.2%. In Australia, the SPI200 contract closed on Saturday a little stronger at 5238 suggesting an increase on the open this morning for the ASX.

On FX markets the Aussie (0.9238) traded a narrow range while GBP (1.5875) continued it rally while Euro (1.3292) finished mid range. Against the Yen the USD lost ground as well closing the week at 99.34.

Australian Dollar still vulnerable

The Australian Dollar had a false break last week with a high of 0.9356 before reversing course and closing around 0.9240 but still with a positive weekly gain of about 80 points. On a weekly basis the chart is still pointing to and overall improvement in the Aussie and higher prices yet but on the dailies the Aussie looks biased back toward 0.9165/75 at the moment.

Can the SPI200 break higher?

The price action on the SFE suggests the ASX will have a more positive day today and while the market seems more ebullient and less worried about the Taper the chances are that it breaks higher once again.

The levels are clear as you can see in the chart above.

Gold was hit for six Friday by a Nikkei report that Larry Summers was going to Chair the Fed. The Low was $1304 oz but gold recovered over the course of the day to close $1325 at week’s end. In other Commodity news crude was quiet but still elevated at $108.63 Bbl, Copper was barely unchanged at $3.23 lb but the Ags were at it again with Corn absolutely tanking with a 6% drop after the USDA increased it latest crop forecast. Soybeans (+3.25%) however went the other way as a late season drought drove prices higher Wheat fell a relatively subdued 2.18%.

On the data front today Westpac Consumer survey is being released in New Zealand, it’s a holiday in Japan which will depress volumes, Inflation data in India is out later on and then in Europe tonight we get Italian trade and EU CPI before NY Empire Manufacturing and US industrial Production data.

Nothing of note here at home.

Have a great day and good hunting

Greg

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