Hopefully the US and Russia are taking a step back from the brink as we received the best news in ages for everyone involved in the Syrian Civil War, for the Americans and the Russians, for the international community, for the innocents in Syria and much less importantly the market in news overnight that both Russian Foreign Minister Lavrov and UN Secretary General Ban Ki Moon have called for Syria to move their chemical weapons to a place so that they can be destroyed. This is clearly an effort to prevent a US missile strike but also is good news for the US and Russia to take a step back from a potentially ugly confrontation.
But markets seem to have reacted more to the Chinese and Japanese data yesterday and over the weekend which showed both that China has come through its soft spot and Japanese growth seems to have genuinely turned a corner for now. Even though the positive tone out of Asia seemed to pass Europe over and land in the US as the FTSE fell 0.25%, the DX was flat and the CAC fell 0.23%. The FTSEMIB soared 1.16% while Madrid was also down 0.25%. In the US the Dow finished up more than 100 points for a gain of 0.94%, the Nasdaq rose 1.26% and the S&P 500 was 17 points higher at 1672 for a gain of 1.02%%.
ON FX markets the Euro (1.3263) continued its recovery away from 1.31 last week, USDJPY is down slightly at 99.59 and GBP (1.5702) also benefitted from a weaker US dollar. The Aussie (0.9230) is up less in percentage terms than the other majors but it really is climbing a wall of worry so any gains will be hard fought.
Having said that though the Aussie Dollar traded up to a high overnight of 0.9241 which is the highest level since late July.
No one seems convinced though beside me and a few other lunatics out there and the market as a result is still heavily short and clearly we haven’t hit a trigger to knock them out. My sense is that this trigger is above 93 cents and probably not until 93.50 which is where short like those instituted by the NAB’s strategy team would be cut.
So there is s till a lot of wood to chop for the Aussie dollar and it is likely to be a grind rather than a leap higher and things like the NAB business survey today are a risk to sentiment.
Looking technically that old trendline you can see at right seems to be a constraint and it comes in this morning at 0.9254 so there will be resistance there. Support is at 0.9170/80.
On Commodities markets the potential reduction in tensions saw Nymex crude fall 1.53% to a still elevated $108.84 Bbl, Gold hardly moved, Dr Copper was up half a percent to $3.28 lb while our friends the Ags just can’t help themselves with Corn down 2.85%, Soybeans fell 2.28% while wheat was 0.98% lower. In other Commodity news Frozen OJ dropped 3.08%
On the data front today we have Kiwi electronic credit card sales, BoJ Minutes, the most important data release in Australia – the NAB Business Survey and then Chinese Industrial Production, retail sales and urban investment. The release in India of the trade deficit will be interesting then we see French industrial output, Italian GDP and BoE Credit and Inflation information. NFIB business optimism is out in the US.
Have a great day and Good Hunting