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Markets’ Confident Start To 2013 Continues

15.26 AEDT, Wednesday 16 January 2013

Markets’ Confident Start To 2013 Continues
By Tim Waterer (Senior Trader, CMC Markets)

While financial markets have enjoyed a confident start to 2013 so far, it is still a potentially hazardous environment for investors with cliff fears replaced by those of a ceiling (of the debt variety). It appears the debt ceiling will be the prevalent theme for traders going forward. But with more political wrangling likely to come, at least investors will be ‘match fit’ for this scenario after the events in Washington at the end of 2012.

The Euro has enjoyed a very brisk start to the year and Jean-Claude Juncker”s comments about its high level may not have a lasting negative effect, particularly given the unanimous ‘hold’ on rates by the ECB last week. With emphasis likely to grow concerning the US debt ceiling, a shift of funds back into the safe haven Greenback may well halt any aspirations of the Euro hitting 1.35 over coming months.

However, market inclination to maintain a bias toward risk appetite could well be dependent upon Chinese GDP data later in the week. Chinese macro data finished 2012 with a relatively wet sail and if we see a GDP number approaching the 8% level this may hold the key for an AUD push towards 1.0620.

Aussie Dollar performance this week is also likely to be defined by Thursday’s local employment data. A strong result could see chances of a February RBA rate cut continue to be priced out. The AUD has continued to operate in close proximity to the 1.0560 level today with moves of a more significant nature likely reserved until we see what shape the labour market is in on Thursday.

The ASX200 continued it’s rather measured 2013 ascent today, with financials and industrials stocks doing more than enough to counteract weakness from the mining heavyweights. Today was perhaps best described as a tentative press forward ahead of key economic releases due in the next two days. While this description may be understating the actual points gained by the index today, it would appear that a number of traders are waiting to see how Fridays Chinese GDP data pans out before buying with more conviction and this is particularly true of the mining sector.



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