Narrow range and strong volume signals strong opposition to the current rally. Like the release of a compressed spring, reversal below 4000 would lead to a sharp fall.
* Target calculation: 4000 – ( 4500 – 4000 ) = 3500
Iron forward market softens – Phat Dragon | Westpac
The iron ore market is beginning to exhibit some signs of modest
unease, with 3mth forwards giving up significant ground while spot
has moved about 5% lower. From an export profitability perspective,
falls in the Australian dollar and Brazilian real have more than
covered the US dollar spot decline. Even so, to Phat Dragon’s eye
a cyclical correction in the ferrous metals sphere appears to be
underway and price expectations should be ratcheting downwards.
Excerpt from Westpac’s Phat Dragon weekly chronicle of the Chinese economy
Aussie Dollar breaks parity as commodities fall
The CRB Commodities Index gapped down to its lower trend channel in response to turmoil in Europe and the resulting stronger dollar.
The Aussie followed its Canadian counterpart below parity, confirming a primary down-trend with an initial target of $0.94*.
* Target calculation: 1.02 – ( 1.10 – 1.02 ) = 0.94
Loonie turns, will Aussie follow?
Canada’s Loonie broke parity against the greenback, confirming a primary down-trend and offering an initial target of $0.94*.
* Target calculation: 1.00 – ( 1.06 – 1.00 ) = 0.94
The Canadian and Aussie Dollars have tracked each other closely over the last year and it seems inevitable that the Aussie will follow the Loonie below parity.
Aussie Dollar heads south as commodities weaken
The CRB Commodities Index is trending downwards in a broad trend channel after a failed rally to test resistance at 350. Expect a test of the long-term rising trendline at 300. The 63-day Twiggs Momentum peak below zero confirms a primary down-trend.
The Australian Dollar broke support at $1.02, signaling a primary down-trend, before testing medium-term support at parity. Failure of support — and breach of the rising trendline — would confirm the down-trend and offer a target of $0.94*.
* Target calculation: 1.02 – ( 1.10 – 1.02 ) = 0.94
Westpac–ACCI Survey of Industrial Trends
The Westpac–ACCI Survey of Industrial Trends reports that:
• The fall in general business conditions is sharper than in 2008/09
• Labor demand softened and availability of labor increased appreciably
• Firms’ profit expectations slumped further — the weakest since 2009.
It concludes with the following statement:
This is a survey which is sending a very clear message. It is time for the authorities to ease financial conditions. Inflation pressures are weak; labor markets are soft; and investment and export plans have softened. Westpac predicted that the Reserve Bank would cut rates in December back in mid July. The case for lower rates is now strong.
Rio Tinto warns of slowdown in demand – FT.com
Rio Tinto, one of the world’s largest natural resources companies, has warned that some of its customers were asking to delay shipments of metals, in a clear sign that the financial turmoil is starting to affect the commodities sector.
Selling pressure on ASX 200
The ASX 200 is headed for another test of 4000. 21-Day Twiggs Money Flow holding below zero warns of strong medium-term selling pressure. Failure of support is likely and would offer a target of 3500*.
* Target calculation: 4000 – ( 4500 – 4000 ) = 3500
Strong dollar costs nation 90,000 jobs | The Australian
INDUSTRIES trying to win exports or fend off imports have shed 90,000 jobs in the past three months as they try to deal with the high Australian dollar.
The only parts of the economy that have been adding staff in any numbers are the state and commonwealth public sectors, health, professional services and the mining industry.
via Strong dollar costs nation 90,000 jobs | The Australian.
Aussie Dollar tests trend channel
The Australian Dollar is testing the lower border of its long-term (Raff Regression) trend channel against the greenback on a weekly chart. Expect strong support at parity. Recovery above $1.075 would suggest a rally to test the upper channel around $1.20*, while failure would warn of reversal to a primary down-trend.
* Target calculation: 1.10 + ( 1.10 – 1.00 ) = 1.20