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The IX AUD sentiment index gives a 55% mixed reading after the Australian central bank came out less dovish of the latest rates meeting.
Markets widely expect the Reserve Bank of Australia to consider interest rate cuts this year as the country’s economy is facing strong headwinds. Declining house prices across major cities compounded by the slowdown of its largest trade partner China, in a world full of uncertainties leave the central bankers little choice down the road. The Aussie’s recovery could be short-lived as markets ponder when the RBA will flinch and start easing.
On the technical side, AUDUSD has broken above the daily resistance of 0.7250 suggesting a strong bullish bias in the short term. The immediate resistance is 0.7290 on the 4h chart. The downside risk is a drop below the 0.72 psychological level.
On the asset sentiment matrix, traders’ bullish opinions are strong at 60%, further confirming the short-term optimistic view expressed above.
The IX Indices sentiment index gives a 72% bullish reading as technology shares boosted risk appetite across equity markets.
The fourth quarter earnings season has been a feast with over two thirds of companies exceeding estimates. Big names like Apple, Microsoft and Google parent Alphabet have led the charge higher. The prevailing accommodative monetary policy combined with hopes of a trade agreement between the US and China have fuelled the risk sentiment that could erase all losses from last December.
On the technical side, S&P’s break of the minor resistance of 2717 has open the path to the key level of 2800. 2700 is the immediate support in case of a pullback. Further down, 2680 is a major level to keep the uptrend intact.
The sentiment-price correlation chart shows investors’ mood rising from the neutral line, suggesting improved sentiment that would fuel the price’s recovery.
The IX Commodities index gives a 73% bullish reading as gold feels over-extension while investors turn to riskier assets.
A string of upbeat corporate earnings and last Friday’s solid jobs data have reminded investors that the US economy is still on track despite moody market behaviours and government’s partial shutdown. Hopes of a settlement between China and the US also keep participants optimistic. The precious metal is likely to be shunned off as investors seek better returns that could make up for last year’s disette.
On the technical side, gold has broken below the 1309 support suggesting mounting selling pressures. 1298 is the next level of support to find strong buying interest. 1323 is the immediate resistance above for any rally to resume.
The sentiment-price correlation chart shows investors’ mood still bullish but is falling towards the neutral line, indicating the price is pulling back after its over-extension.
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