Outperformers: Industrial (2.7percent ), Consumer Staples (2.1%), Financials (1.5%)
Laggards: Utilities (0.1%), Energy (0.3percent ), Healthcare (0.4%)
US Futures: S&P 500 (0.8%), DJIA (0.8%), Nasdaq 100 (0.8percent )
AUD: The Australian Dollar is underperforming after having a dovish surprise from the RBA. Though the central bank had kept rates at 0.1%, the QE application had been extended, earlier than many had expected and hence the following drop in the money. Alongside, the RBA noted that the exchange rate had appreciated and is in the upper end of the range of recent calendar year. As such, this suggests that perhaps the AUD had been the motivation behind the dovish surprise. Another factor weighing on the currency has become the continued pullback in iron costs, which might see the AUD continue its underperformance from its own Tasman counterpart.
USD: The dollar stays in retrieval mode having left a break over the 91.00 handle. Alongside this, with USD/JPY testing 105.00 and EUR/USD falling to two-month lows, the momentum looks like it will persist for the USD. Going back to the Euro, the money has broken below key support at 1.2065, raising the danger of a fall to 1.2000-11. In turn, given that placement is still very far on the long side for the Euro as well as retail (IG) dealers buying the dip with net-longs up 38% since yesterday, EUR/USD is vulnerable to some long liquidation should 1.2000 give way.
Commodities: After multi-year earnings in yesterday’s session, silver has reversed with all the (not so) precious metal falling 5.3% (at the time of writing). Overnight, the CME had raised margin requirements by 18% contributing to the pullback. Nevertheless, may have posted a double top with all the rejection at $30. Elsewhere, gold is on the backfoot with a milder USD (highlighted in our weekly prediction ) and pick up in US real returns particularly, maintaining risks tilted to the downside. Subsequently, the important area to see is 1800-10, coinciding with the 50WMA, which is a degree that gold has not closed under since Dec 2018.
