Australia: Miners under attack

14.38 AEDT, Thursday 14 March 2013

Miners under attack
By Ben Taylor (Sales Trader, CMC Markets)

Our market has come under increasing pressure with our miners seemingly under attack today, despite the US markets’ spectacular jump in retail sales while hitting its ninth consecutive day gain in a row.

A weakening Europe, expected aggressive Japanese monetary easing and fiscal stimulation, and a resurgence of the US economy is driving the US dollar higher and putting downward pressure on US denominated assets.

Australia’s main export Iron Ore is coming under increasing pressure from US dollar strength and Chinese demand fundamentals as the Chinese government acted to curb investment in their property sector. The changing dynamic is set to slow Chinese steel production and constrain demand for Iron Ore.

The market is acting like we are in for a sustained retreat in Iron Ore after its higher charge since Christmas. Investors favour taking recent profits at these elevated levels in the miners while waiting for stabilisation in our market before jumping back in.

Today’s jump in Australian job numbers further compounded the selling pressure today as the market reduces its expectations for further local interest rate cuts during the year. It seems the RBA has now done enough and will remain on the sidelines as the local economic data improves.

The far better than expected jobs data shot the Aussie dollar higher on the reduced need for interest rate cuts, swiftly consolidating over 70 points higher and easily breaking resistance to post new short term highs.

ENDS

Web: http://www.cmcmarkets.com/

© Scoop Media