Global equities higher, cash futures pricing in a 71% chance of RBA rate cut tomorrow, ASX futures 34 points higher

Sure enough, Australia's ASX 200 reached the bottom of its recent range on Thursday and Friday--recording intra-day lows of around 5,750--before rebounding 100 points, when we include the gains that ASX futures (first chart) made on Friday night. The ASX 200 should open today somewhere around 5,840-50 and this will be supported by a significant lift in expectations of a rate cut tomorrow, given that interbank cash rate futures rose from pricing in a 57% probability of an RBA rate cut from the beginning of last week to a 71% chance by Friday. This move has affected the Australian dollar (second chart), dragging it down from last week's US 80c+ highs to be trading currently at US$0.7840.

HSBC Chinese PMI aside (11:45, Sydney time), it will be a very quiet day for data today. In today's last chart (VIX), you can see that the recent ups and downs have not been enough to increase the implied volatility of the S&P 500 - it seems that markets remain complacent.

Here's an excerpt from some technical analysis written by Rivkin Global Investment Director Oliver Gordon on the ASX 200 levels: "The ASX200 is currently testing a major zone of support between 5,810 and 5,740 which has been in place for the past three months. With the SPI200 futures up 34 points on Friday night, it appears that support will hold once again. From here, expect to see a move back to the middle of the range as a minimum, towards 5,870 to 5,900. However, we expect that a retest of resistance at 6,000 is a high probability. Anyone looking to take positions at current levels on Monday morning should have stops below the low of last week, which was 5,749. Positions could be added to on a break of 6,000."


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:Chinese HSBC PMI out at 11:45am, 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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