The Aussie remains strong while stocks in the US make a fresh all-time high

July 24, 2014

Markets are a weird beast sometimes and there is no better example this morning than the fact that the Aussie dollar has fallen after the RBNZ jacked up rates again – taking the OCR to 3.5% and RBNZ Governor Wheeler warned that the Kiwi’s strength was “unjustified”.

So even though AUDNZD is through the roof the Aussie is off about 20 pips from the highs around 5am at 0.9461.

I’m not normally one to quote myself because lets face it there is always an huge element of cherry picking by pundits when they do that. But yesterday’s set up we highlighted and the potential for a move to the range top was as obvious a convergence of fundamentals and technicals as you can get.

So what we see now is the very thing we expected – a test of the range top.

Key now is that unless or until the Aussie breaks up through 95 cents its still in a great big Darvasian box.

Anyway back to the overnight action and solid earnings helped propel the S&P 500 to a new all-time closing high of 1,987.09 up 3 for a gain of 0.17%. The Dow was down 0.16% however at 17,087 and the Nasdaq rose 0.4% to 4,474.

It seems you can’t kill this market with a stick but as former US Treasury Secretary Tim Geithner highlighted the complacency in markets is unsettling.

In Europe things were more positive as well with the DAX up 0.2% to 9,754, the CAC up 0.15% to 4,376 while the FTSE was up ever so slightly with a rise of 0.04% to 6,798. That’s not a bad performance given BoE Governor Mark Carney warned of higher rates and sooner rather than later overnight.

– Locally on the ASX futures market the SPI 200 was up sharply at 5542 for a gain of 19 points on the September contract. Yesterday the physical ASX200 rejected a very important trendline when it had a run at 5600 and a break of this level would be a huge move if it can happen.

Here is what the ASX looks like in Vantage FX MT4 terms – close but no break yet.

In Asia yesterday the Nikkei dipped just 0.09% to 15,329, the exchange in Shanghai was up 3 points or 0.12% to 2,078 but Hong Kong stocks were higher with the Hang Seng rising 0.8%. Today is a big day for the region with the release of Japanese tade data along with the HSBC flash Chinese manufacturing PMI and its Japanese counterpart the Nomura/JMMA PMI.

On currency markets the Aussie’s bounce gained further traction topping out at 0.9461 before the RBNZ it is sitting at 0.9440. Euro’s weaker drift continued and it sits at 1.3460 while Sterling strangely also fell even with Carney’s warning – it sits at 1.7041. USDJPY is becalmed at 101.47.

On commodities iron ore tanked and has now given up 50% of its gains. It closed down $1.25 to $93.08 tonne. Newcastle coal for September was down a marginal 5 cents tonne at $68.40.

Nymex crude for August was up 73 cents Bbl to $103.79. Gold has drifted lower dropping $10 oz to $1,303 and copper is unchanged at $3.19 lb. Corn rose 0.62%, wheat is up 1.19% and soybeans rallied 1.44%.

On the data the Chinese and Japanese data are the key releases today in Asia then we head to Europe for the flash PMI’s and UK retail sales. In the US Markit also releases a flash PMI along with new home sales, jobless claims and the Kansas City Fed manufacturing index.

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