Negative PMI halts market momentum

15.39 AEST, Friday 21 September 2012

Negative PMI halts market momentum
By Tim Waterer (Senior Trader, CMC Markets)

Accentuation of the negative themes this week has served to halt market momentum, with subpar PMI readings from China and Europe dissipating some of the positive vibes which occurred in the wake of recent central bank stimulus announcements.

The Euro has had its run above 1.30 interrupted by a fresh bout of risk aversion on the back of the PMI data from around the globe, with the safe haven favourites such as the US Dollar and Japanese Yen regaining some buyers as traders question the real state of play.

The Australian Dollar (AUD) has been a distinct under performer of late and not surprisingly it was the one to react most adversely to the most recent set of Chinese PMI data on Thursday. When the AUDUSD rate dipped below 1.04 it started to take on an ‘oversold’ appearance and as such the stint below 1.04 has been brief. Today it has made quite steady progress all the way to 1.0475 however any push to 1.05 and beyond will be reliant on US equity markets posting a decent finish to the week.

Australian shares traded in mostly lethargic fashion to cap off the week, but the ASX200 index still managed to punch out some gains to move beyond 4400 once again. However, the stay of the ASX200 above 4400 is still looking a little precarious given our markets exposure to commodity prices which have shown high volatility of late. Market enthusiasm for stimulus is proving to have a short shelf life and some positive economic indicators will soon be needed to avoid a pullback in global stock indices.

: http://www.cmcmarkets.com/

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