Global equities mixed, AUD lower, ASX futures down 15 points

There wasn't a great deal of movement in financial markets overnight. Equity and commodity markets were mixed overnight and the biggest major mover over the last session was the Aussie dollar, after some surprisingly poor Chinese trade data emerged yesterday. The market was expecting a March trade balance of US$40.2 billion and received an actual figure of US$3.08 billion - this resulted from a year-on-year export growth figure of -15% while the market was expecting +10%. Poor exports are being blamed mostly on the rising US dollar, to which the yuan is pegged, which made Chinese exporters less competitive. This theme will need to be combated, particularly due to the falling demand for Chinese goods from Europe due to its efforts to stimulate domestic exports there.

You can see from today's first chart that the AUDUSD took an immediate hammering and is now trading around 80 pips (or 0.8 of one US cent) lower from its level prior to the announcement. This is interesting because it has distracted AUD traders from the previous theme of RBA interest rate cut expectations and thus it will now be a tricky trade to figure out where it might go from here. The dampened trade environment in China will be concerning for the RBA and if the Government does as good a job of selling this year's budget as they did the last, then it will be the RBA that will be forced into action. Appropriately, the interbank cash rate futures closed yesterday pricing in a 79% chance of a cut in May - I wouldn't be surprised if the short-covering that follows the reveal of a cut will overpower any selling, therefore I wouldn't be surprised to see the AUDUSD drift higher from here given that the short opportunities are presently a little crowded and risky.

Today's second chart shows the ASX 200 coming off in chorus with the AUD yesterday and the ASX cash index CFD has now broken yesterday's session lows - I think the market will struggle to hold ground today, there may be some bearish bets placed in anticipation of poor Chinese GDP numbers that will be released on Wednesday at 12pm, Sydney time.

Today's last chart shows the EURUSD currency pair in orange testing its March lows, having straight-lined from US$1.10 to the mid US$1.05 level. If you look at this and the US dollar index (black) you can assume that this significant support level for the EURUSD and resistance level for the US dollar index will be tough to crack - EURUSD traders might consider taking profits on shorts and re-entering on a break below US$1.045, or taking long positions at market with stops at that same level in an attempt to trade the range.

Today‚Äôs charts are taken from the Rivkin Trader platform. 30,000 global instruments available to trade including FX, commodities, index, ETFs and international shares. Trade Australian share CFDs from just $8 or 0.10%. Click here or phone 1300 748 546 to open a Rivkin Trader account now.

Upcoming economic announcements: NAB's Australian business confidence survey at 11:30am, UK CPI at 6:30pm, US advance retail sales at 10:30pm, all Sydney time.


This article was written by Scott Schuberg, CEO of Rivkin Securities Pty Ltd. Enquiries can be made via info@rivkin.com.au or by phoning +612 8302 3600.

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