Equities continue to be a mixed bag

13 February, 2018

The Australian dollar has been the strongest at the start of the trading week, lifting nicely against the USD and other major pairs. For AUD traders it's set to be a bit of a big week with business confidence due out shortly, closely followed by unemployment rate figures in the middle of the week. After all the action last week traders will be looking for a positive employment figure to help shore up the idea that the RBA may indeed look to lift rates in the near future. Additionally, metal markets will most likely also be in focus as iron ore and copper prices will have a large effect on any movements in the AUD. Overall though, the AUD continues to be an attractive trade for a number of traders based on the volatility it has been experiencing with the USD and the trending nature of its moves.

Looking at the AUDUSD on the charts, it has so far managed to climb strongly today to resistance at 0.7864. The market will be looking to see if it can push through this key level and extend further to 0.7926 on the chart. Movements above this may struggle due to the 80 cent mark always being a little bit tough for the AUD against the USD - especially in the long given its ability to swing. In the event we see a bearish shift the focus will be on the first level of support at 0.7780 and of course the 200 day moving average. Beyond this the next level of support can be found at 0.7719.

The US equity markets were another rollercoaster for traders for the open of the week as the S&P continued to try and surge back after the recent movements from last week. While the bears certainly took a big swipe, there are still plenty of bulls out there who believe the current macroeconomic fundamentals are ideal in this environment. Regardless of that fact, the equity markets continue to be incredibly volatile in this environment and in reality could be open to further large movements during the week.

From a technical perspective the S&P 500 has shown that the 200 day moving average is the current dynamic level of support in the market. So far it has been a case of two touches and twice the bulls have surged back in to take control. Today's rise hit resistance at 2666 and looks like it may extend higher to 2698 tomorrow if bullish conditions continue. In the event we do see another bearish swing I would be closely watching 2628 which is looking quite strong as support, a breakthrough of this level though could signal more run away bearish action to the 200 day moving average, as bearish dips have been large and fast moving recently.


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