Asian Open: Trading Volumes To Be Restored, RBA Up Next

With traders in the UK and US set to return to their desks we expect trading volumes to recover over the next 24 hrs. RBA hold their policy meeting at 11:30 AEST, although no change is expected.

Charts (2)

Asian Futures:

  • Australia’s ASX 200 futures fell -36 points (-0.502%), the cash market is currently estimated to open at 7125.6
  • Japan's Nikkei 225 futures are down -40 points (-0.14%), the cash market is currently estimated to open at 28820.08
  • Hong Kong's Hang Seng futures are down 0 points (0%), the cash market is currently estimated to open at 29151.8

European Friday close:

  • UK's FTSE 100 index rose 2.94 points (0.04%) to close at 7022.61
  • Europe's  Euro STOXX 50  index fell -31.1 points (-0.76%) to close at 4039.46
  • Germany's DAX  index fell -98.85 points (-0.64%) to close at 15421.13
  • France's CAC 40 index fell -36.94 points (-0.57%) to close at 6447.17

US Futures:

  • S&P 500 E-minis are  index down -11.25 points (-0.27%)
  • Nasdaq 100 E-minis are  index down -31.75 points (-0.23%)
  • Dow Jones E-minis are  index down -81 points (-0.23%)


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Weak close for Europe, US futures currently down

European shares were lower during a low-volume session, the euro STOXX 600 index fell -0.5% whilst the DAX and CAC closed -0.6% lower. Deutsche Bank (DBKG) was one of the worst performers, sliding -1.3% after the Wall Street Journal reported the bank had been told by the Federal reserve that it was still not addressing persistent failings with their anti-money-laundering controls.

Futures markets are pointing to a weaker open with the S&P 500 E-mini futures currently down -0.27% and sitting beneath 4200 at a two-day low. The ASX 200 hit a fresh record high yesterday in early trade, only to reverse course as rising cases in the state of Victoria weighed on sentiment. Eyes will be on case numbers today, as its looking increasingly likely that the greater Melbourne region will have its seven-day lockdown extended. Key levels of support for bulls to defend today are the 7138 and 7082.


ASX 200 Market Internals:


ASX 200: 7161.6 (-0.25%), 31 May 2021

  • Healthcare (0.47%) was the strongest sector and Energy (-1.59%) was the weakest
  • 5 out of the 11 sectors outperformed the index
  • 8 out of the 11 sectors closed lower
  • 85 (42.50%) stocks advanced, 103 (51.50%) stocks declined
  • 12 hit a new 52-week high, 1 hit a new 52-week low
  • 69% of stocks closed above their 200-day average
  • 67.5% of stocks closed above their 20-day average

Outperformers:

  • + 4.27%   -  Resolute Mining Ltd  (RSG.AX) 
  • + 3.57%   -  Perseus Mining Ltd  (PRU.AX) 
  • + 3.52%   -  Inghams Group Ltd  (ING.AX) 

Underperformers:

  • -17.8%   -  Nuix Ltd  (NXL.AX) 
  • -6.79%   -  Link Administration Holdings Ltd  (LNK.AX) 
  • -5.04%   -  Austal Ltd  (ASB.AX) 


Forex: AUD pairs hold steady ahead of RBA meeting

Ranges were understandably limited overnight with the UK and US on public holiday, and most of the action was seen on commodity crosses and yen pairs. The US dollar index (DXY) fell to a three-day low after breaking beneath its two-bearish hammers on the daily chart. As mentioned in yesterday’s video, range trading strategies are preferred whilst prices remain between the 89.50 – 90.40 range.

AUD/NZD is within a corrective phase after last week’s bearish breakout. Two lower spikes have formed to show demand around 1.0600, so its correction may not yet be complete.

Given the strength of bearish momentum overall, and the fact we have a hawkish RBNZ compared with a dovish RBA, we favour further downside on this cross. However, keep in mind that the RBA hold their monetary policy meeting today which leaves the potential for volatility – unless the consensus of ‘no change’ is correct, in which case AUD/NZD has the potential for fall further.

And given the backdrop going into this meeting we’d prefer to fade into any bullish spikes below resistance levels around the 1.0700 handle (50% retracement, 1.0692 and 1.0714 lows)



AUD/CAD is considering a break beneath 0.9300, although yesterday’s inverted hammer shows bulls are trying to lift it from its lows. If we can see (say) an hourly close beneath 0.9300 then it could open up a run for the October low at 0.9248.

AUD/CHF is stuck in a sideways consolidation although its daily trend is grinding lower overall. The 20-day eMA is capping as resistance and the 200-day eMA sits right on the February 11th low at 0.6868. We just need to see a break beneath 0.6925 to bring the 200-day eMA into focus for bears.

EUR/AUD is yet to break above last week’s high but prices are holding above 1.5724 support, where a three-day bullish pattern has formed called a Morning Star reversal. A break above 1.5832 brings the 1.5900/47 resistance zone into focus.


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Commodities: Metals remain elevated (yet lack conviction to continue higher)

Copper futures are holding around last week’s highs and Friday’s candle suggested support has been found at the breakout level of 4.58. We are now waiting for prices to break last week’s high and continue in the direction of its established uptrend on the daily chart.

Gold prices remain elevated above 1900 and just below last week’s high. A bullish hammer on Friday confirmed support at 1880, although our bias remains bullish above the 1872.80 low. Silver is trying to close above 28.0 but its supposed breakout above this key level currently lacks to conviction we had hoped for. Still, our bias remains bullish within its rising channel and we would switch to a bearish bias should prices dip below 27.20. In the case of metals in general, DXY needs to move towards the lows of its two-week range to help these metals rise.


Up Next (Times in AEST)


You can view all the scheduled events for today using our economic calendar, and keep up to date with the latest market news and analysis here.

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