News & Analysis
Catalan Independence; Prime Minister May Spoke; Chinese Factory Growth
Major economic data releases for today:
▸ 19:30 AEST – GBP Manufacturing PMI
▸ 01:00 AEST – USD ISM Manufacturing PMI
Despite the Spanish government’s efforts to stop Catalan referendum, the poll went ahead and was far from peaceful with reportedly hundreds injured as the Spanish government tried to stop the voting with force. We saw Euro weakened this morning as markets watched over the weekend. If independence is announced, it will likely have negative impact on the Euro at least in the short term due to regional instability.
In the UK, Prime Minister May spoke over the weekend defending the British economy, quoting ‘Our economy is not broken,’ which had an impact on the GBP open this morning as pairs started the week with a gap lower. The GBPUSD opened twenty pips lower at 1.33702. Buyers have filled that gap in morning trade.
Friday was a positive day in China as data showed Chinese factories have grown at their strongest in five years. The ASX200 enjoyed the news helping to break a two day losing streak to close 7 points higher. This morning we’ve also seen further buying currently higher by 12 points.
US markets finished the week higher, the Dow Jones added 42 points and the S&P500 added 9.30 points. The Dow Jones posted its first eight quarter winning streak in twenty years while the S&P hit fresh records. So far this morning, the USD has been weaker with risk currencies making gains. The EURUSD, AUDUSD and GBPUSD are all slightly higher and GOLD has started the week lower by $1.36. The JPY is also trading lower this morning – USDJPY flat, AUDJPY, EURJPY higher. We’re also looking for stronger open on the Nikkei this morning.
EURJPY buying continues, 131.71 set up the current continuation. Price is still inside, it’d be interesting to see how buyers will react when 133.42 is reached. Sellers have been active from that area to 134.40.
AUDUSD medium term support confirmed at .7799 – .7807. Buyers have started the week in the black but we’re seeing short-term resistance at .7859 with minor support at .7830. A break of the short-term resistance will show buyers are holding the imbalance.
XAUUSD has two mixed influences this morning playing out. Global tensions has subsided further, and the USD is weaker. Price has started the week softer but buyers are about. We see two levels for potential support, 1275.92 current level and lower 1271.17. Price is finding buyers at the first level with fast divergence in support. The Friday’s move may have over extended, we’re looking for a short-term move up while 1275.92 continues to offer support.