NAB tips two more RBA rate cuts

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Overnight we saw small drops on the DOW and S&P500, Gold settled around its lows still finding support around 1333.50. Oil rallied higher with hopes OPEC will stabilize supply. The USD was mixed as the AUDUSD tested highs. The USDJPY rallied by 37 pips to test short a term high of 102.55.

NAB Australia tips two more RBA rate cuts, despite solid business. Chinese inflation see’s new lows as PBOC signals need for “Innovative” monetary policy. Asian and local equity markets have been a little stronger than I expected this morning with the Nikki increasing by 86.76 points. ASX200 up by 8.16 points at this point in the session. I expected flatter to slightly weaker sessions today. The HSI has followed my original thoughts currently lower by 0.19%. The EUR/USD is putting in a stronger Asian session off its lows and holding firm above 1.1070 support. The CAD continues to see sellers as the USDCAD is currently testing its weekly high at 1.3180. Gold has started to edge lower, I want to see 1333.50 holds on the short term to keep a trend continuation idea in play.

I’m seeing some signs we could see some weakness creep into stock indices tonight. A few are sitting and struggling at highs, more on this below.

AUDUSD –  Sell idea still forming for me at this point, I’m still looking for it to confirm. Divergence is still present. Buyers are still struggling to break through the upper resistance. The current move up is in more of an ending diagonal now than a clean cut trend channel. A break out tonight to the upside changes the picture entirely. Until this happens I’m continuing my wait.

GER30 – Seeing a possible sell idea forming. We have seen price hit a previous high and find some selling pressure. The current candle can be seen as an evening star due to its gap. Divergence is starting to form. A rally tonight through the yesterday’s high cancels this idea out.  

SPX500 –  As with the above, price stalling at highs. Divergence has formed. I looking for price to close lower tonight to confirm a sell idea. If we have a stronger session tonight and break above 2188 my sell idea will be canceled.    

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Written by Joseph Jeffriess, GO Markets Market Strategist