8@eight: ASX set to slide as dollar hits six month low
Shares on the local stock market are set for a lower open on Tuesday, with futures suggesting an eight point fall.
1. Europe: While Italy's leading bank Monte Paschi races to raise 5 billion euro of capital via placements, the Italian government will meet to authorise an increase to the national debt for a bailout package. Markets seem very comfortable that a resolution will be found over the coming weeks.
2. Currencies: Coming into the Christmas period the EURUSD appears to have lost the 105 handle with traders squaring up or reducing position size. The EURUSD has traded within a 0.7% range of 104.00 to 104.79 for the past 3 trading days.
with the USDJPY easing back under 118.00 after an extraordinary run over the past month, traders are looking to lock in profits before Christmas. Markets are divided on the outcome for USDJPY with 2017 estimates ranging from and even 100.00 to a high of 128.00.
3. Trump: With Donald Trump coming into office in less than 30 days there is room for a significant reversion in these USD moves over the past 5 weeks. Momentum traders will be watching this over the holiday period.
Year end liquidity is becoming an issue as the USD index remains firmly above 1.03 and trading into the high area of recent consolidation.
AUDUSD a new 6 month low at 0.7242 on continuing following the S&P rating agency holding Australia's AAA rating.
US Dollar strength that seems determined hold gains and is now trading toward the high end of the range at 103.03. US Dollar bulls remain in the market.
4. Gold: Tension in the South China sea has help lift Gold back to the $1138 range, this seems to be a tepid move with solid resistance at $1142 inside this ongoing down trend. A price target of $1100oz emains. With the AUD falling to 6 month lows it is still unable to lift the Australian dollar gold price back above a key $1600oz level currently settling at $1569 we may see some buying gold stocks today.
5. Oil: Oil settles at $52bl and looks to be consolidating above the key $50bl level.
6. Shares: The ADR's (American Depository Receipt) of BHP, at $24.80 down 29¢ however CBA's ADR shows $81.47, so a lower open is expected with the futures suggesting a 8 point fall. Markets on open today will be dealing with a possible terrorist attack in Berlin.
The shooting of the Russian ambassador in Turkey has seen the Lira slide a currency that has already depreciated 17% since the 1syt of October.
In late trade the US market recovered from the intraday lows as news of the suspected Berlin attack comes through.
7. Today's diary:
- Local data: RBA latest meeting minutes
- Overseas data: Bank of Japan policy meeting; UK Prime Minister Theresa May is questioned by the House of Commons Liaison Committee, made up of senior lawmakers, about her plans for exiting the European Union; Nike earnings
8. Market highlights:
- SPI futures down 8 points or 0.1% to 5520
- AUD -0.7% to 72.49 US cents
- On Wall St, Dow +0.1%, S&P 500 +0.2%, Nasdaq +0.2%
- In New York, BHP -1.4%, Rio -1.5%
- In Europe, Stoxx 50 flat, FTSE +0.1%, CAC -0.2%, DAX +0.2%
- Spot gold +0.5% to $US1140.26 an ounce
- Brent crude -0.1% to $US55.16 a barrel
- Iron ore down -0.3% or 27 US cents to $US81.22 a tonne
- St coal -0.3% to $US86.20, Met coal not traded from $US270.00
- LME aluminium -0.3% to $US1712 a tonne
- LME copper -2.5% to $US5495 a tonne
- 10-year bond yield: US 2.53%, Germany 0.24%, Australia 2.86%
This column was produced in commercial partnership
between Fairfax Media and IG.
The story 8@eight: ASX set to slide as dollar hits six month low first appeared on The Sydney Morning Herald.