Late surge makes for a bullish close on Wall St, AUDUSD awaits 2:30pm rate decision, ASX futures up 42 points

In today's first 10-minute chart you can see that the S&P 500 (black line) took a turn and leapt higher at around 6am this morning, and the ASX SPI 200 futures (orange line) followed suit. As a result we have a strong open of +41 points today with the caveat being that the RBA doesn't disappoint the market by leaving rates unchanged. Personally, and it's a gamble to discuss this, I don't see a great need for the RBA to cut rates. Inflation is not forcing them to cut rates - it's low, but not dangerously so. Unemployment is looking ok and the level of the AUDUSD is around the level that Glenn Stevens previously wished it to. So therefore, the RBA has to 'want' rather than 'need' to cut rates, which it would do if it genuinely believed that Australian consumers would respond very positively to it, or if it felt as though the economy is going to get worse over coming months and it wants to get ahead of the curve.

Today's second chart shows the jump in the 30-day interbank cash rate - as its price has risen, so too has the Australian dollar fallen, which combined have led broad market expectations of an RBA cut. However, the majority of economists surveyed by Bloomberg are predicting a 'no change' result from the meeting today, and now it is up to traders to decide whether to listen to the market or listen to the economists.

Finally I've included a chart of the USDJPY currency pair, showing just how quiet this trade has become since the spotlight turned on Europe. The range on the USDJPY (orange) is so well-bound that it almost looks like a data feed error, while the EURUSD currency pair has found a comfortable spot in the US$1.1250-US$1.350 range. It is likely that Europe will be in a state of flux for weeks. The Greek government has just been elected based on promises to inflict no more austerity measures on its people in exchange for further funding from the ECB, IMF and European Commission. It can't just turn around now and accept whatever structural reform requests that these three institutions make, so it must be seen to be arguing against them for at least a few weeks. Greece will not snub continued funding offers from its creditors, it can't afford to, economically or politically. So it must just argue for a while - I think the market knows this and as a result Europe has gone a little quiet.

Today’s charts are taken from the Rivkin Trader platform. 30,000 global instruments available to trade including FX, commodities, index, ETFs and international shares. Trade Australian share CFDs from just $8 or 0.10%. Click here or phone 1300 748 546 to get your free $100,000 demo account.

Upcoming economic announcements: AU trade balance at 11:30am, Australian interest rate decision at 2:30pm, Swiss trade balance at 6pm, all Sydney time.

comments powered by Disqus

DISCLAIMER: Rivkin aims to provide clear and simple information to those visiting our website. If any part of this disclaimer does not make sense, please phone Rivkin and ask to speak with a member of our Dealing and Relationship Management Team. Rivkin provides general advice and dealing services on securities, derivatives and superannuation (SMSF). Rivkin also provide SMSF administration and accounting services. Rivkin does not provide advice that takes into account your, or anybody else's, investment objectives, financial situation or needs. We strongly suggest that you consult an independent, licenced financial advisor before acting upon any information contained on this website. Investing in and trading securities (such as shares listed on the ASX) and/or derivatives (such as Contracts for Difference or 'CFDs') carry financial risks. CFDs carry with them various additional risks that differ from more simple securities such as fully-paid company shares. Some of these risks include not owning the underlying instrument from which a price is being derived, settling trades 'over the counter' with a financial institution rather than on a stock exchange, and using leverage to gain access to trades that may have a higher face value than your initial deposit. This risk of leverage means that it is possible to lose more than your initial investment. Our aim is to create more life choices for our clients, which means improving the wealth of clients throughout many market cycles by nurturing a relationship spanning many years. If you are not comfortable with your understanding of the risks involved before using a Rivkin product and service, please contact our office to seek further information or a Product Disclosure Statement, or make an appointment to sit with one of our friendly financial experts. It is in our interest for your Rivkin experience to be a rewarding and comfortable one. Rivkin is a trading name of Rivkin Securities ABN 87123290602, which holds Australian Financial Services Licence No. 332 802.