The Aussie dollar is drifting toward support as stocks come under pressure

April 28, 2014

As we come back from the Anzac day public holiday there is a little selling to catch up with in stocks but currency markets have been fairly well contained over the past few days.

Looking first at stocks in the US on Friday and it was Amazon’s disappointing earnings which managed to knock the Nasdaq sharply lower on Friday night with the stock down 9.9%. Ford Motor also disappointed investors dropping 3.3% after its earnings which added downward pressure in the broader market. These disappointments followed a drop in the flash services PMI to 54.2 from 55.3 although consumer sentiment rose to 84.1 – a nine month high.

Which meant that at the close stocks were lower with the Dow was 141 points lower, dropping 0.85% to 16,361, the S&P 500 dropped 16 points for a fall of 0.83% to 1,863 while the Nasdaq lost 1.74% to 4,076.

Looking at the Techs for the S&P 500 it was a big down day again and quite an ugly weekly candlestick which suggests we might see stocks under a little pressure again this week.

Locally that means we’ll start under pressure on the ASX which closed down 23 points in futures trade with the June SPI 200 at 5505 bid.

European shares were under pressure as well with the simmering tensions in the Ukraine and the fall in US stocks weighing. The FTSE fell 0.25% in the UK to 6,686. the DAX was off 1.54% with Craig James from Commsec saying Deutsche Bank lost 2% on concerns it has to raise more capital or fail bank stress test. In Paris the CAC dropped 0.79% to 4,444. Stocks in Milan and Madrid came under heavy selling pressure dropping 1.73% and 1.49% respectively.

In Asia markets had a poor end to the week with Shanghai stocks down 0.97%, while the Hang Seng dropped 1.5%. Across Asia the composite Asia Dow fell 21 points or 0.67% to 3,083. in Tokyo the Nikkei was marginally higher, up 0.17% to 14,429. Retail data in Japan is out today.

Both the Yen and Nikkei look like they are in subtle down trends with USDJPY biased toward 101.20ish

Speaking of Forex, it has been fairly quiet as Forex traders wait for the next macro shoe to drop. Euro is still above 1.38 at 1.3839, the Pound is stuck to 1.38 still and USDJPY is at 102.24. The Aussie is also fairly becalmed at the moment sitting at 0.9272 this morning.

It has been a technical trading market in FX lately with markets supporting trendline over the past couple of months with both GBP and EUR bouncing of support like the Aussie support above.

So the level to watch on the Aussie is 0.9235/45 for the next couple of days.

On commodity markets keep an eye on Nymex crude which has broken a recent uptrend and sits back at $100.69 Bbl off 1.31%. Gold has managed to regain $1300 just over the weekend and sits at $1300.50 this morning. Copper bounced higher in London on Friday which helped drive prices in US trading to $3.12 lb. On the Ags it was positivity across the board with corn 1.15% higher, while wheat and soybeans rose 1.63% and 1.77% respectively.

On the data front today is quiet with no Australian data scheduled. As noted above retail sales data is out in Japan before German import price data and then pending home sales and the Dallas Fed manufacturing survey in the US tonight.

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