Delayed push higher as traders assess weekend data

Delayed push higher as traders assess weekend data

By Tim Waterer (Senior Trader, CMC Markets)

There was a delayed push higher by the ASX200 today with the Australian market looking unconvincing in the early stages before posting gains of a more solid nature in afternoon trade.

It seems traders were unsure of how to balance the disappointing Chinese data on the weekend against the bumper US payrolls data, which created an unsure mindset. However, moves higher on the Nikkei and Hang Seng seemed to reassure the local market. The Australian market eventually found its feet today however it was not all one-way traffic with the large mining stocks facing selling pressure in light of the unspectacular Chinese data released on the weekend.

Most markets across Asia seemed to put more faith in the improving US jobs market over the latest Chinese indicators which came in on the low side. The result was another day of advances across the region. The Chinese industrial production and retail sales numbers did miss the forecast on the downside, however they were far from disastrous and as a result most of the emphasis today across Asia was on the decidedly rosier looking US labour market.

The US Dollar continues to enjoy ‘currency of choice’ status amongst traders. The equation of positive US data and positive US equities equalling a positive US Dollar is becoming more commonplace than in recent history, which represents a significant shifting of the landscape. The flow-on effect of the US Dollar’s evolution towards semi-risk status is that correlations we have come to know and love since the GFC, potentially face significant change.

The Australian Dollar did not get the lift it traditionally would have in the wake of an improving US labour market, with the US Dollar garnering much of the buying attention. The AUD may be curtailed this week until we see how the Australian jobs data shapes up later this week, particularly with plenty of question marks still surrounding the domestic interest rate outlook. With commodity prices still being restrained by general US Dollar strength this may also limit the AUD’s capacity to make great strides in the coming days. Overall the AUD’s price movements will be subject to how long the current US Dollar strength prevails.
ends

© Scoop Media