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IG Markets - Morning thoughts and opening prices

Good morning,

Risk sentiment was subdued through European and US trade with risk assets mostly losing ground, particularly in the equities space. There is a degree of caution being exercised ahead of the US earnings season and some key meetings among European leaders. After trading at the top end of the recent range, it just seems like market participants are reluctant to keep driving this market higher until we get the next catalyst. AUD/USD enjoyed a strong bounce off a key support level in yesterday’s session and rallied to a high of 1.022 in US trade. The pair’s recovery stalled at 1.022 and it now seems like it is headed back to test yesterday’s lows. EUR/USD remained in a relatively tight range around 1.297.

Ahead of the open, we are calling the Aussie market down 0.1% at 4479. There clearly isn’t much to drive this market in any direction at the moment. On the local economic calendar, today we have NAB business confidence and a speech by RBA Deputy Governor Lowe. This could be a source of volatility for the Aussie dollar as AUD/USD looks like it is headed back to yesterday’s lows. Further weakness in the AUD would actually be a positive for several local industries. Elsewhere in the region, Japan will be back online today after yesterday’s holiday. There is quite a bit on the economic calendar in Japan today with current account numbers and BOJ Governor Shirakawa on the wires.

On a stock level, we expect a firmer start for BHP Billiton with its ADR suggesting it will be up 0.6% at $33.44. Iron ore miners could get a lift from a 6% rise in iron ore prices to $110.40. It is now up 27% from the September lows. There was also a mild recovery in the gold price which could translate well for local gold names after struggling yesterday. Investors will continue to monitor Pharmaxis after yesterday’s share price rise. There has been speculation the company may be subject to a takeover from an offshore suitor.

MarketPrice at 7:30am AESTChange Since Australian Market ClosePercentage Change
AUD/USD1.01910.0029 0.28%
ASX (cash)4479-2 -0.05%
US DOW (cash)13571-10 -0.07%
US S&P (cash)1454.1-2.8 -0.19%
UK FTSE (cash)58497 0.12%
German DAX (cash)7300-52 -0.71%
Japan 225 (cash)8798-66 -0.74%
Rio Tinto Plc (London)29.85-0.02 -0.07%
BHP Billiton Plc (London)19.24-0.06 -0.31%
BHP Billiton Ltd. ADR (US) (AUD)33.440.19 0.58%
US Light Crude Oil (November)89.680.39 0.44%
Gold (spot)1775.23.8 0.22%
Aluminium (London)2080-7-0.32%
Copper (London)8179-8-0.09%
Nickel (London)18064-147-0.80%
Zinc (London)2256-5-0.23%

IG Markets provides round-the-clock CFD trading on currencies, indices and commodities. The levels quoted in this email are the latest tradeable price for each market. The net change for each market is referenced from the corresponding tradeable level at yesterday’s close of the ASX. These levels are specifically tailored for the Australian trader and take into account the 24hr nature of global markets.

Please contact IG Markets if you require market commentary or the latest dealing price.

Market Strategist


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