Australian markets will be exceptionally quiet next week. The latest Chinese economic data are encouraging for Australian businesses. China has successfully slowed its economy to a more sustainable growth rate. Now the challenge is to lift momentum, but not so far as to reignite inflation. As expected, the Australian dollar slid, on Friday afternoon in reaction to China’s dismal second quarter 2012 gross domestic product (GDP) growth performance.
QE3 or no QE3 will remain one of the primary questions that investors will seek answers to in the new trading week. Although the rally in the U.S. dollar against the euro and other major currencies suggests that traders are lowering their bets on a third round of stimulus, the inconsistent movements in other markets indicate that many market participants are still undecided. A quick survey will show that expectations for QE3 are very malleable at this point, which is what makes next week's economic reports so important.
EUR-AUD dropped to new record low of 1.1934 last week and broke 1.2 psychological level before making a temporary low there and recovered. Initial bias remains neutral this week for some consolidations. But as long as 1.2096 minor resistance holds, near term outlook remains bearish. Below 1.1934 will target next projection level at 1.1352. However, considering bullish convergence condition in 4 hours MACD, break of 1.2096 minor resistance will indicate that a short term bottom is at least formed and will turn bias back to the upside and bring rebound back to 1.2395 resistance.
In the bigger picture, down trend from 2.1127 (2008 high) has just resumed. Sustained break of 1.2 psychological level will pave the way to 100% projection of 1.3808 to 1.2132 from 1.3028 at 1.1352 next. On the upside, break of 1.3028 resistance is needed to be the first signal of medium term bottoming. Otherwise, we'll stay bearish even in case of strong rebound.
No comments:
Post a Comment