The ASX 200 is headed for another test of support at 4000. Declining volume displays no evidence of bargain-buying. Failure of support is likely and would offer a target of 3500*.
* Target calculation: 4000 – ( 4500 – 4000 ) = 3500
Australia Investor Confidence at Lowest Level Since 2009 – WSJ.com
Australians face rising electricity bills, fuel prices and mortgage rates, and the increasing cost of living has been exacting a toll on the economy.
Neither consumers nor businesses are in the mood to borrow in a major way. Veda’s quarterly Consumer Credit Demand Index, released Monday, showed consumer credit demand has dropped 5.1% since March. Business credit growth was flat in July, after having not posted growth for four straight months, St. George Bank economist Janu Chan said. In the year to July, business credit contracted 1.9%. “Lackluster growth in business credit is consistent with softening business confidence, and adds to evidence that certain sectors of the economy are doing it tough,” Ms. Chan said in a note.
via Australia Investor Confidence at Lowest Level Since 2009 – WSJ.com.
Fighting Australia’s “hot money” problem – macrobusiness.com.au
Australia is a large net borrower from the rest of the world. A large deficit in a capital account along with a deficit in the balance of trade while the currency is rising are all strong evidence that Australia has a problem with currency speculation.
Currency speculation, sometimes called “hot money” , needs to be controlled because it can cause some serious imbalances in the local economy both on the way in, and on the way out. There are a number of well-known symptoms for hot money in-flows, these include:
• Asset bubbles
• Currency appreciation
• Inflation
via Fighting Australia’s “hot money” problem – macrobusiness.com.au.
ASX 200 headed for another test of 4000
Declining volume and strong red candles at the recent ASX 200 reversal warn of another test of 4000. Support at 4000 is unlikely to hold unless there is a strong spike in volume, similar to that in early August. Failure would offer a target of 3500*.
* Target calculation: 4000 – ( 4500 -4000 ) = 3500
A longer-term view of the All Ordinaries Index shows declining 13-week Twiggs Money Flow below zero, warning of selling pressure.
* Target calculation: 4000 – ( 4500 – 4000 ) = 3500
The Rolex economy – macrobusiness.com.au | macrobusiness.com.au
My main concern is that frighteningly, the RBA, and probably much of the government, sees Australia’s future as a single bet on mining, and is willing to sacrifice much of the remaining economy for this to happen……. Remember, the minerals will be in the ground if we don’t mine them now, but the decades of production chains elsewhere in the economy are easily destroyed and slow to rebuild.
I acknowledge that the RBA has a single tool in its toolbox, but surely the message we should be hearing is that a strong and stable economy is a diverse economy. Quarry Australia is a very volatile and risky place to want to be.
via The Rolex economy – macrobusiness.com.au | macrobusiness.com.au.
Disleveraging and retail – macrobusiness.com.au | macrobusiness.com.au
We’ve long established the link between [Australian] house prices and retail sales, but here is a pretty clear illustration of the link between mortgage creation and sales.
This stands as a stark warning to anyone expecting a bounce in retail sales so long as disleveraging continues. Let alone actual deleveraging.
via Disleveraging and retail – macrobusiness.com.au | macrobusiness.com.au.
Aussie stronger
The Aussie Dollar followed commodities higher, breaking through $1.06 to signal a test of resistance at $1.10. 63-Day Momentum holding above zero suggests continuation of the up-trend. In the long term, breakout above $1.10 would offer a target of $1.20* — though this is only likely if we see more quantitative easing from the Fed.
* Target calculation: 1.10 + ( 1.10 – 1.00 ) = 1.20
The Aussie Dollar is testing the upper trend channel against its Kiwi counterpart; breakout would warn that the down-trend is weakening. Reversal below $1.245 would warn of a test of the lower trend channel.
* Target calculation: 1.24 – ( 1.28 – 1.24 ) = 1.20
Housing falls accelerate – macrobusiness.com.au | macrobusiness.com.au
Australian house prices continued to slide in July, according to the latest RP Data-Rismark house price index.On a seasonally adjusted basis prices fell 0.6% in July while the 0.2% June decline was revised lower to show a fall of 0.4%
via Housing falls accelerate – macrobusiness.com.au | macrobusiness.com.au.
Aussie weaker
The Aussie Dollar continues to consolidate between $1.03 and $1.06 against the greenback. Failure of support at $1.03 would test parity, while breakout above $1.06 would target resistance at $1.10. In the long term, declining commodity prices are likely to drag the Aussie lower — unless the Fed starts printing money again.
* Target calculation: 1.03 – ( 1.06 – 1.03 ) = 1.00
The Aussie Dollar is testing the upper border of the declining trend channel against its Kiwi counterpart. Reversal below short-term support at $1.255 would indicate respect of the upper channel and a down-swing to around $1.20*. Breakout above $1.28 is unlikely but would warn that the down-trend is weakening.
* Target calculation: 1.24 – ( 1.28 – 1.24 ) = 1.20
NZ bucks trend
New Zealand is one of the few markets that is bucking the trend — its agriculture-based economy fairly insulated from the global down-turn. ENZL, the MSCI New Zealand ETF, recovered above its former primary support level at 31.50 after strong bullish divergence on 13-week Twiggs Money Flow. While technically still a bear market, retracement that respects the new support level of 31.50 would confirm a test of 34.
