ASX's sell-off fuelled by weaker AUD, futures 11 points higher this morning

As the US dollar continues to reverse its initial response to last week's Federal Reserve interest rate announcement (at first the US dollar weakened, but since Friday night it has rallied), the Australian dollar has been on the receiving end of US dollar strength and has weakened as a result - it's trading below 70c this morning. We know that the ASX 200's intra-day performance has been sensitive to AUDUSD performance, given the exit of unhedged foreign investors whenever they get the whiff of a fresh down-trend in the Aussie dollar. However, the ASX 200 over the long term continues to lead the relationship between the two and right now that index is being pinned down and beaten but it's remaining staunchly opposed to sinking below 5,000.

While we'll always firmly point out that past performance is not a reliable guide to future returns, there are some interesting stats associated with this particular juncture whereby we're about to enter the fourth quarter of the calendar year. Why? Well, statistically and seasonally, October is not a bad time to buy - over the past 23 years, the ASX 200's performance over the fourth quarter is characterised by:

  • 18 years of positive gains
  • 5 years of negative gains
  • An average gain of 2.90%
  • December being the strongest month across the year (evidence that backs the Santa Claus rally), with a 2.26% average gain for that month alone

There will be no local data releases of note before the end of the week so I think markets will be relying heavily upon buying support and selling resistance levels across both the AUDUSD and ASX 200 and it's a logical time to remind all readers that Rivkin's October 2015 Blue Chip strategy will be released last next week. If you do have any cash on the sidelines that has been destined for an equity investment, we would recommend taking a close look at the 10-stock list once it is published. If you have any questions about this, please phone 1300 748 546 and speak with a Relationship Manager.


Source: Rivkin, Saxo Bank

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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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