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Market Outlook: Reserve Bank of Australia hints at a cut

Governor Lowe’s speech in Brisbane
May 21, 2019

At an address to the Economic Society of Australia today Philip Lowe noted: ‘’a lower cash rate would support employment growth and bring forward the time when inflation is consistent with the target’’. Their key cash rate has been stuck at a record low 1.5 per cent since August 2016 and their next rate-setting meeting is June 4th. This for a country where house prices had been booming and has not seen a recession in 30 years.

Social media channels are reporting the possibility of China weaponizing its rare-earth materials. State news agency Xinhua said yesterday that President Xi, accompanied by vice premier and chief trade negotiator Liu He, visited a JL MAG Rare-Earth plant in Jiangxi – sending the share price limit-up today. Heavily used in new technologies industries, the US depends on China for 80 per cent of imports of these metals.

DAX 30

Retreating back down towards the neckline of the huge head and shoulders top, an area which now coincides with this year’s trend line support and Fibonacci 23 per cent retracement support. A sustained break below here would add to bearish pressure.

 

SHORT TERM TRADER: Square.

 

POSITION TAKER:  Square.

FTSE 100

Unusual price action yesterday hints at a market looking for direction.

 

SHORT TERM TRADER:   Square.

 

POSITION TAKER:  Short at 7275; stop above 7400. Target 6875.

S&P 500

Momentum remains bearish as we held under 50 per cent retracement resistance yesterday. Note that other US indices fared worse on the Google-Huawei news, Nasdaq off 1.5 per cent, FAANG shares off 2.7 per cent and the Philadelphia semiconductor index dropped 4 per cent – putting it on track for its biggest monthly fall since 2008, according to City AM.

 

SHORT TERM TRADER:  Short at 2880; stop above 2960. Target

 

POSITION TAKER:   Short at 2866; stop above 2900. Target 2740.

BRITISH POUND/US DOLLAR

Giving up a good 75 per cent of this year’s earlier gains, becoming oversold in the process, as PM May’s ‘bold’ new deal goes down like a bucket of sick.

 

SHORT TERM TRADER:  Square.

 

POSITION TAKER:  Square.

EURO/US DOLLAR

Looking deflated at levels last seen in the summer of 2017 two days befor the election for new EU members of parliament.

 

SHORT TERM TRADER:  Square.

 

POSITION TAKER:  Square.

GOLD

Approaching trend line support taken from last year’s low with precious little momentum. Today the FCA reports that scammers have pocketed £27 million in cryptocurrency and forex deals; they might have added precious metals and other alternative investments too.

                            

SHORT TERM TRADER:  Short at 1287; stop above 1297. First target 1270.

 

POSITION TAKER:  Square.

Nicole Elliott is a long-standing member and Fellow of the Society of Technical Analysts and has taken over the IC’s trading coverage.  She is regularly interviewed and quoted by the financial media, is a conference speaker, and author of several books on charting.