Asian Open USD Lower After FOMC Minutes Bearish Triangle eon EURAUD

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U.S. spot market close Wednesday:

  • The Dow Jones Industrial fell -54.57 points (-0.16%) to close at 34,934.27
  • The S&P 500 index rose 3.94 points (0.09%) to close at 4,475.01
  • The Nasdaq 100 index fell -17.18 points (-0.12%) to close at 14,603.64

Asian Futures Contracts:

  • Australian futures on the ASX 200 are up 3 points (0.04%), the spot market is currently estimated at 7,287.90
  • Japan’s Nikkei 225 futures are up 30 points (0.11%), the spot market is currently estimated at 27,490.40
  • Hong Kong Hang Seng futures are down -3 points (-0.01%), spot market is currently estimated at 24,715.90
  • China A50 index futures are down 0 points (0%), spot market is currently estimated at 15,079.73

US indices recouped earlier losses and effectively closed flat while volatility was below its true middle range. It looks like a new catalyst is needed, and while tensions remain with Russia and Ukraine, they haven’t risen or fallen much, removing a directional element from sentiment. Futures markets point to an uneventful open, although the ASX 200 looks set to challenge 7300.

The ASX 200 looks ready to challenge 7300

You know it’s a good day when more than 80% of ASX 200 stocks have rallied. And it might have risen more than the 1% it did, if the Materials and Energy sectors hadn’t posted losses that day. Healthcare stocks emerged from the dead, with the sector posting a 6.2% rally, in its most bullish session since March 2020. CSL’s strong half-year earnings supported the sector.

9 of 11 ASX 200 sectors posted gains and the index closed at the peak of the day. 7300 and 7340.40 remain key levels for the bulls to conquer in the short term, and we would like to see any breakout accompanied by above average volume to reach conviction.

ASX 200: internal market elements

20220217moversASXci

ASX 200: 7284.9 (1.08%), Feb 15, 2022

  • Healthcare (6.22%) was the strongest sector and energy (-0.74%) was the weakest
  • 9 of 11 sectors closed higher
  • 2 of 11 sectors closed lower
  • 7 of 11 sectors outperformed the index
  • 165 (82.50%) shares rose, 28 (14.00%) shares fell

Outperformers:

  • +17.99% – Liontown Resources Ltd (LTR.AX)
  • +12.73% – Imugene Ltd (IMU.AX)
  • +11.67% – Treasury Wine Estates Ltd (TWE.AX)

Underperformers:

  • -9.76% – Netwealth Group Ltd (NWL.AX)
  • -3.35% – Infratil Ltd (IFT.AX)
  • -2.84% – Santos Ltd (STO.AX)

Dollar weakens after FOMC minutes

20220217moversFXci

There has been a lot of noise around a potential 50 basis point Fed hike in March and up to seven hikes this year in total. Yet the minutes of their January meeting lacked such conviction, even though, to be fair, the meeting was held before a jaw-dropping inflation print of 7.5%. Minutes revealed that any tightening would be on a meeting-by-meeting basis, which took pleasure in some hawkish punch bowls and sent the US dollar lower overall.

EUR/AUD breaks out of descending triangle

NZD and AUD were the best performers, AUD/JPY reached our initial target of 83.0 and should close above this handle. Momentum continues to point in the wrong direction (up) on NZD/CAD, so we are removing our bearish bias for now, even though the 0.8514 high has not been breached.

20220217euraudCI

Another cross that caught our attention is EUR/AUD as it broke down from a descending triangle. The pattern projects a target just above the S1 monthly pivot at 1.5650. Interim support is around 1.5700 and the 1.5750/72 area, making them viable targets down the road. Although prices are meandering around the monthly pivot point and showing potential for mean reversion, it may be prudent to see if 1.5834 holds as resistance before engaging on the sell side.

Oil volatility remains high

Still, he apparently isn’t ready to give up earlier gains just yet. Traders seem right to take Russia’s ‘troop withdrawal’ request with a pinch of smelly salts. And with demand remaining high alongside calls for $100 oil, it will likely take more than a mere mention of troop withdrawals to reverse the black gold for now. WTI held above 91.77, a long-term support level overnight, and is expected to remain a pivotal level today.

Gold portends a breakout

Gold reclaimed its safe-haven status after Tuesday’s volatile swing and recouped most of the previous day’s losses, using 1850 as a springboard in the process. A daily close above 1880 would be constructive for the bullish case, as it erases the November high and takes the yellow metal to its most bullish level since June 2021 – likely due to geopolitical tensions.

Up Next (hours in AEDT)

Calendar 20220217AEDT

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