Sterling looking for support as Aussie rallies – watch HSBC PMI today

March 23, 2014

The S&P rallied on Friday but couldn’t hang onto the gains in what you might call cautious trade given the message from Fed Governor Bullard who sought to clarify the comments from Fed Chairman Yellen during the week about interest rates in the US. Bullard noted that Yellen’s point about 6 months was more a reflection of “the surveys that I had seen from the private sector had that kind of number pencilled in…that wasn’t very different from what we had heard from financial markets. So, I just think she’s just repeating that.”

So at the close the Dow lost 28 points or 0.17% to 16,303. The S&P lost 5 points to 1867 for a loss of 0.27% even though it was up earlier while the Nasdaq lost 0.98% as biotech stocks came under pressure.

European shares where higher in London, Frankfurt and Paris rising 0.22%, 0.5% and 0.16% respectively but in Milan and Madrid stocks slid into the red with loses of 0.58% and 0.27% respectively.

Locally on the ASX the June SPI 200 contract lost 21 points to 5306 bid on Friday night and is likely to open under pressure this morning.

On Currency markets the US dollar lost some the strength it showed the previous day with the Euro recovering to 1.3795. This recovery might prove ephemeral however given that ECB Governing Council member Erkki Liikanen said over the weekend that the ECB might still lower rates and could actually take rates negative. GBP continued to lose ground sliding to a weekly close of 1.6484 and is looking for support

1.6450 is the level to watch.

USDJPY ended the week at 102.23 while the Aussie rose back to within half of cent of recent highs closing the week at 0.9081.

Defying logic and all the calls for it to head lower the Aussie dollar continues to find the buyers.

The ANZ last week said that this is partly because of the interest rate differential which is so positively in favour of the Aussie dollar. This may be as it is but equally as you can see from the chart below traders are also playing a very technical game.

0.8980 to 0.9016 are the key support levels with 0.9135/55 resistance.

On commodity markets tensions over Crimea helped lift Brent and its US cousin Nymex Crude higher. In the US Nymex cruse ended just under $100 Bbl at $99.55. Gold climbed off the mat rising $5.50 oz to $1,335.80. Copper closed at $3 lb while the Ags big moves continued. Corn was quiet rising 0.1% while wheat fell 1.49% and soybeans fell 1.74%.

On the data front the release of the flash HSBC Chinese PMI will be the key event today while tonight European and US flash PMI’s will be released.

Have a great day and good hunting

Greg

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