IG - Morning Thoughts And Opening Prices

IG - Morning Thoughts And Opening Prices

Good morning,

It was a fairly good night for risk assets with a rally in commodities being the theme of the session. There were also some big moves in the FX space with the pound being one of the best performers on the back of the better-than-expected GDP data. GBP/USD spiked from around $1.528 to a high of $1.548 after the UK’s GDP data showed a 0.3% rise versus expectations of a 0.1% increase. There had also been increasing calls of a triple-dip recession for the UK which had seen the pound remain subdued as some investors positioned themselves for a disappointing reading. However, the reality is there remains significant economic problems in the UK, and the BoE might have to spring to action soon.

EUR/USD was also quite choppy with an initial spike higher to $1.3094 on the back of Angela Merkel’s comments on rates, which was greeted by sellers, and resulted in the pair dropping back into the $1.3000 region. A headline suggesting the Bundesbank rejected the OMT programme in a confidential opinion seems to be the primary driver for the retreat in risk. The full article will be published later today in the European session, and could revive serious concerns for the single currency. AUD/USD enjoyed a strong rally off its lows from the CPI data as commodities came back to life. The pair jumped to a high of $1.034 but has since dropped back below $1.030 as risk appetite wanes heading into Asian trade.

The main focus for the region today will be Japan with CPI data and the BoJ set to hit the wires. CPI is expected to show a 0.4% fall when it is released at 9.30am. With the BoJ focused on reaching the 2% inflation target within two years, the only way to play USD/JPY today seems to be long. Should Japan’s CPI disappoint, then we can expect the BoJ to ramp up the rhetoric. At the same time, should CPI come in ahead of expectations, this means the BoJ is well on track, and sets USD/JPY up very well for a rally. As a result, today might be the day that USD/JPY finally hits ¥100.

Ahead of the open, we are calling the ASX 200 up 0.6% at 5134. Having missed out on a day of trade yesterday, miners will be catching up to some of the gains seen in the commodities space. BHP’s ADR is pointing to a 2% gain to $32.33, despite iron ore struggling. Copper and gold plays are the place to be today with both metals enjoying strong rallies. After having been beaten down recently, look out for the likes of OZ Minerals, Sandfire Resources and PanAust. The banks are likely to continue holding up ahead of their reports, with all eyes on dividend growth. ResMed will be in focus after its third quarter EPS beat estimates, while revenue missed. EPS was up 32% and growth margins surprised to the upside in an overly strong performance. We’ll probably see the stock trade through $4.50 today and potentially head towards its January high, also its all-time high, of $4.65. Graincorp will also be in focus after receiving an improved $12.20 a share offer from Archer Daniels. GNC closed at $11.87 on Wednesday.

IG Markets provides round-the-clock CFD trading on currencies, indices and commodities. The levels quoted in this email are the latest tradeable price for each market. The net change for each market is referenced from the corresponding tradeable level at yesterday’s close of the ASX. These levels are specifically tailored for the Australian trader and take into account the 24hr nature of global markets.

Please contact IG Markets if you require market commentary or the latest dealing price.

STAN SHAMU
Market Strategist
www.igmarkets.com

ENDS

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