Positive data everywhere but no help for the embattled Aussie dollar which is betwixt and between with the speculative community lined up against it but fundamentals moving in its favour.
We’ll get to that late but first the data some very good trade data in the US on the back of a big fall in energy imports helped the US trade deficit print $34.25 billion. The positive in this is that the smaller the trade deficit then the less it subtracts from growth, via net exports, and so the stronger the US GDP print will be for Q4 and then into 2014.
Data out of Germany as also on the good side of the ledger with showed retail sales tripling expectations with a print of 1.5% mom for November while at the same time unemployment was favourable falling 15,000 for a much better result than expected. Also positive was the return of Ireland to the bond market with the sale of $3.75 billion of 10 year bonds.
Can you believe that bond investors are back in Irish bonds already – what was that Midnight Oil song, Short Memories?
Anyway the result was a fairly positive night on stock markets. In Europe the FTSE was the under performer rising just 0.36% but the German DAX was 0.83% higher, in Paris the CAC rose 0.84% while in Milan and Madrid stocks rose 1.22% and a stunning 2.94% respectively as sentiment toward the periphery was buoyed by the German data and Irish bond sale.
The US market took this lead and the positive data and ran with it strongly at the open and although it drifted back a little over the course of the day it was still a positive day. At the close the Dow is up 106 points or 0.64%, the Nasdaq has risen 0.96% and the S&P 500 is up 11 points or 0.61% to 1,838.
On the ASX the March SPI 200 Futures contract in overnight trade is up 26 at 5320 bid.
Turning to FX markets given the improved economic outlook it seems weird that the Aussie dollar lost 0.56% on the day and sits at 0.8917 this morning. The big selling came just after the trade data yesterday.
Improved global growth is supposed to help the Aussie but the specs are lined up selling and are very short at the moment close to a top quartile position over hte past 6 and 12 months in terms of shorts.
I’ll replicate the chart I used at Business Insider so you can have a look and then we reprise the technicals.
Looking at the Aussie’s tech’s it needs to hold 0.8840/45 to remain trending back higher – my trading systems suggests the buy zone is below 0.8900 for a rally while above this level.
On the other major FX markets Euro is largely unchanged at 1.3618 as the data from both jurisdictions balanced each other out. GBP is likewise unchanged at 1.6407 while the USD rose 0.26% against the Yen with USDJPY sitting at 104.47.
On Commodity markets gold came under selling pressure again losing $8.50 oz or 0.69% to $1229. The where to for gold is an interesting question.
On the daily charts gold is mixed but still has a slight bias higher but looking at the 4 hour chart below you can see that, based on my system, the bias is for gold to fall a little and fill some of the gaps that most certainly opened up during the flash crash the night before last.
As a trader over the past 25 years or so I have noticed countless times that gaps usually get back filled – Gary Gap Filler we used to call this price action – so this 4 hourly chart has a psychological edge as well as a technical edge to it.
This means that a back fill to the $1215 low is possible but this needs to hold otherwise a bigger retracement is on the cards.
Oil rallied a little off support to $93.72 Bbl for a gain of 0.31%. Copper is unchanged at $3.41 lb while the Ags saw corn and wheat down 0.41% and 0.54% respectively while soybeans rose 0.21%.
On the data front this morning we see the release of the AiG Performance of Construction index and ANZ Job Ads before some really important Chinese data including trade, industrial production and retail sales. Tonight in Europe we get German trade and factory orders data, Italian unemployment as well as the EU wide unemployment and retail sales reports.In the US the ADP employment report is important as a lead up to non-farm payrolls on Friday night as well as the minutes from the most recent FOMC meeting which might give some more colour on the path of the Fed’s taper.
Have a great day and good hunting
Greg
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NB: Please note all references to rates above are approximate