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Consolidation day for markets

Yesterday’ recovery in the Australia 200 avoided a confidence sapping break below chart support at 5600 which had threatened on Monday. The market looks like consolidating again today as investors wait on the reporting season and in the absence of any overnight news to change the macro outlook

The Fed’s statement does not reveal any change in stance from its last meeting. It will wait on economic data and the Trump Administration’s policy to determine the pace of monetary tightening with the most likely options for 2017 being a choice between 2 or 3 rate hikes.

The Aussie Dollar will be sensitive to this morning’s trade data. A consolidation or improvement on the big positive turnaround last month could see $A testing last week’s high at .7609. However, traders will have 2 data sets to consider at 11.30. Building Approvals have been trending in the opposite direction to the trade data. Overall softness in approvals in recent months suggests residential construction could be a negative for economic growth in the second half of the year.

Copper prices will be a focus over the next week. The increasing likelihood of a strike at the Escondida mine increases the prospect of similar action at other mines with disruptions tightening supply over coming months. This could be a positive for the copper price but be a negative for those miners whose production is disrupted.

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