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Markets wait on CPI data and Fed meeting

Firmer commodity prices, a steady Aussie Dollar and yesterday’s rejection of chart support have combined to produce a stronger open by the ASX 200 this morning

Volatility has been a consistent theme of the Australian stock market over recent weeks. This morning, it’s on display again as the ASX 200 acts independently of the US lead to continue its bounce off yesterday’s low. Yesterday, the ASX 200 had a crack at pushing below the support levels of recent weeks. However, this was quickly rejected as bargain hunters stepped in. A key consideration for chart followers today will be whether the ASX 200 confirms this rejection of support by moving above yesterday’s high at 5723

The stock market had a neutral lead from US markets which are focussing on their profit reporting season. Concerns over Google’s increasing spend on partners to acquire revenue from mobile search ads saw its parent, Alphabet sold in after-hours trading following release of its results. However, the Australian market is looking through this as a stock specific issue, despite the fact that US index futures are a little softer in after-hours trade.

The Aussie Dollar has retreated from last week’s peak and is now in neutral mode as traders wait on tomorrow’s crucial CPI data followed by the Fed meeting. In a mirror image of this situation, some of the stocks impacted by a stronger $A, like CSL, have also stopped falling as they wait on tomorrow’s data. Significantly, any rally in CSL off last week’s low would represent a rejection of the key 38.2% Fibonacci retracement level. 

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