Is the Aussie top in? Will the ECB derail the Euro?

There are always parallels between sport and life and the appalling performance of the Australian Cricket team in the 20/20 World Cup is an indication of how things can go awry very quickly.

From a market perspective and in that form a trading perspective you might say the Aussie Cricket teams RSI was well through 90 and a sell off was inevitable. From My system’s point of view a pullback to test support might be how I’d put it if we were charting the fortunes of the Australian Cricket team.

It’s the same story for the Aussie dollar which has been pushing all before it recently but now looks like it might be finding the air a bit thinner up near 93 cents against the US dollar.

The high Friday just under 93 has seen a half a cent loss to 0.9241 this morning and the 4 hour charts suggest that a further decline is possible if 0.9230/35 gives way. The target would be 0.9199 on this timeframe which would accord with a retest of the break out from the trendline in the chart above.

Turning now to Friday nights action and the impact here at home it’s likely that local stock markets should get a lift this morning after a combination of strong US economic data lifted US stocks firmly into the green at the close Friday. On the ASX Futures market the SPI 200 June contract is up 12 points to 5367 bid.

Equally the phone conversation over the weekend between Putin and Obama (Putin called) to say Russia has no plans for invading Ukraine even though they have 50,000 troops on the border might also help markets today.

US personal income was slightly higher than expected up 0.3% in February helping personal consumption print as expected up 0.3%. Rounding out the triumvirate of consumer data Uni of Michigan consumer sentiment printed 80 which was a smidge lower than expected but still pretty good according to reports.

So at the close the Dow was 0.36% up 59 points to 16,323. The Nasdaq continued to underperform into the week’s end rising just 0.11% while the S&P 500 rose 9 points in its recent saw tooth pattern within a tight range closing at 1,858 for a gain of 0.48%.

On Stocks, and US stocks in particular, it is worth reading Henry Blodget’s piece on the market from the weekend – you can find it  here.

In Europe it was a sea of green with UK GDP printing as expected up 0.7% in Q4 for a 2.4% rate through the year. In the EU economic sentiment printed a little stronger than expected at 102.4. But perhaps the big catalyst for the move higher in continental stocks was German import prices which fell 0.1% in February to take the 12 month fll to 2.7% and thus increasing the chance that the ECB moves toward QE at this week’s announcement.

In the End the FTSE was 0.42% higher, the DAX bounced 1.44% and the CAC rose 0.73% while in Milan and Madrid stocks rose 1.53% and 1.27% respectively.

On global bond markets understandable the US bond market didn’t like the data but the 7 point rise to 2.72% might have caught a few people by surprise. German bonds rallied a point however to 1.55% on the back of the deflation in import prices and the UK Gilts found sympathy with US rates up 7 points also to 2,72% on the GDP data. Locally on the SFE 3 year bond’s fell 3 points to 96.94 (3.06%) with 10′s also 3 points lower to 95.85 (4.15%).

On FX markets the Euro recovered from early weakness on Friday which is strange given the moves in bonds and stocks on the back of increased expectation of ECB QE which should undermine the Euro. But it sits this morning at 1.3750ish which I struggle with and I am targeting a test of trend line support at 1.3650/60.

Sterling’s recovery continued and it sits at 1.6657 this morning while the USDJPY is closing in on 103 at 102.92.

On commodity markets gold’s sell off stalled for a day at $1294. Nymex crude rose a little to $101.67 Bbl, Dr Copper fairly soared to $3.06 lb while Corn, wheat and soybeans all dropped losing 0.41%, 2.11% and 0.10% respectively.

Datawise today we get HIA New Home Sales and Private Sector credit which will give a lead on RBA monetary policy traction. Retail sales in Germany should be huge tonight as will the EU wide CPI – watch that one if you trade Forex – tonight also the Chicago PMI is out in the US.

Have a great day, Greg. 

NB: Please note all references to rates above are approximate