Markets rethink previous nights action – Aussie dollar and S&P test trendlines

March 21, 2014

The market theme song has to be “what a difference a day makes” as last night price action in the US reversed the previous nights reaction to the Fed Taper and Yellen’s guidance on rates. As a result US markets were higher and the US dollar was then unable to hold onto peak gains.

It seems also that it was the strong data, particularly the Philly Fed Indexes jump to 9 from -6.3 last that drove stocks higher. That’s probably true but it also reinforces why the Fed is still tapering and why the FOMC members think rates will be higher in 2015 and 2016. Just something to think about.

Turning to the Russian/Crimean Front the Russian Lower House voted to annex Crimea while US President Obama has stepped up pressure by targeting Russian President Putin’s Inner Circle with Sanctions.

All of which combined for a recovery from yesterday’s lows with the Dow notching up a a triple digit gain of 109 points for a rise of 0.67% to 16,331. The Nasdaq is up 0.26% and the S&P 500 is up 11 points to 1,872 for a gain of 0.6%.

The S&P to me looks like the top is in for a while as I wrote yesterday.

But last night the S&P rally took it back to test the trendline of this theory as you can see below.

1870 the key level to watch on a day close

In Europe the FTSE fell 0.47% and in madrid the IBEX 35 fell 0.13% but across the rest of the Continent stocks were higher with the Stoxx 600 up 0.11% to 328. The DAX rose 0.2%, the CAC is up 0.46% and the FTSE MIB in Milan rose 0.56%.

Here at home the June SPI 200 contract on the ASX Futures market is up 17 points to 5312.

On forex markets the Aussie dollar has found support at an up slopping trend line again overnight and traders will be watching that into week’s end. It sits at 0.9027 this morning down 0.1%.

The Aussie is trading very technically at the moment – hemmed in by a big 1 year old down trendline and the 200 day moving average at the top and a short term trendline (roughly anyway) at the bottom.

Which way is it going to go?

It needs to break up and through 0.9140 or down below 0.8995, call it 0.8987,  to get a wriggle on in either direction.

Elsewherre the Euro has lost more ground down 0.41% to 1.3774 but the ANZ reckons it’s a buy in a note released overnight. The pound is lower and is also on trendline support at 1.6497 this morning. USDJPY rose 0.11% to 102.41.

The Chinese Yuan continues to weaken with USD/CNY rising to 6.23 this morning.

On commodity markets gold came back from a low around $1319 to sit at $1,326 this morning down 0.81%. Copper pulled back after yesterdays big bounce from the lows and sits at $2.98 lb down 1.72% this morning. Crude has also slipped back under $100 Bbl losing 0.94% to $99.38. On the Ags there was a reversal of fortune with Corn down 1.85%, wheat off 1.68% while soybeans were up 0.17%. The Oats and Coffee sell off continued down 4.7% and 5.8% respectively.

On the data front it is a very quiet slide into the weekend with only an Australian Leading index of growth and Euro zone current account and consumer confidence to trouble the scorers.

Please note: I had a brain explosion yesterday and said Fed Minutes originally instead of Fed or FOMC decision. Apologies for that I can’t explain it. 

Have a great day and good hunting

Greg

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