Commodity prices are on the rise. Copper and oil are stand out performers, but lead zinc and nickel have all joined the party. Iron prices are stabilising, albeit at lower levels, but thermal coal prices are up almost 50% since the May 2017 low. This co-ordinated rally in industrial commodities not only indicates a better global outlook, it also flags support for the AUD.
In contrast Europe may be experiencing the after glow of a significantly lower EUR. In my view the EUR rally since March is imperilling growth. Stubbornly low wages, employment and consumer activity suggests much of the boost came from external sources. This export led recovery is in danger with the EUR 15% higher against the USD. The stance of the ECB remains staunchly accomodative, possibly reflecting caution over near term prospects. A weakening EUR is important to the continent.
Sell EUR + buy AUD = sell EUR/AUD.
This is where the chart comes in. Note the daily uptrend line. A fall below 1.5090 would break the trend, potentially flagging a fall. Traders with a shorter term focus may target levels just above support around 1.4800. Swing traders may prefer to wait for a test of the 1.4800 level, as abreach would signal a new longer term downtrend.
CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
CMC Markets Singapore may provide or make available research analysis or reports prepared or issued by entities within the CMC Markets group of companies, located and regulated under the laws in a foreign jurisdictions, in accordance with regulation 32C of the Financial Advisers Regulations. Where such information is issued or promulgated to a person who is not an accredited investor, expert investor or institutional investor, CMC Markets Singapore accepts legal responsibility for the contents of the analysis or report, to the extent required by law. Recipients of such information who are resident in Singapore may contact CMC Markets Singapore on 1800 559 6000 for any matters arising from or in connection with the information.