Australia200 for Wednesday, May 7, 2014
Over the last couple of weeks or so the Australian 200 Index has slowly but surely eased away from its multi-year high achieved a couple of weeks ago near 5560. In doing so it has returned to back under the key 5500 level which has provided some reasonable resistance over the last few months. This level will likely continue to play a role should the index return back there and continue to offer some resistance.
The index has done well over the last couple of months to move steadily higher from support around 5300 up to beyond 5500, forming higher peaks and higher troughs along the way. The support level at 5300 may also be called upon should the index fall lower and will also likely play a role in providing some buffer from any decline. Since February, most of the trading activity has occured between 5400 and 5500 therefore the former level may also be called upon to prop up prices. The index has done very well over the last couple of years moving from below 4000 to its present trading levels around 5500. .
The RBA on Tuesday left interest rates unchanged at a record low of 2.5 percent, in line with market expectations. In a statement, the central bank said the Australian dollar remains historically high. The RBA added that it sees a period of stability for interest rates and an improvement in the labor market, although it would be sometime yet before unemployment declines consistently. The central bank's decision comes a week before the coalition government is due to hand down its first budget since winning the elections in September last year. The government has already warned of a tough budget, which will likely include temporary income tax hikes, raising the retirement age and cuts to spending on social services in a bid to trim the country's deficit.
"The RBA is comfortable with where things sit at the moment," said Matthew Circosta, an economist at Moody's Analytics. "It's interesting they mentioned the budget, the government is talking tough ahead of the federal budget next week." "I agree with the sentiment on the labor market, I think that's what they are going to be watching closely over the next three to six months and that is probably where we need to look at for where rates are headed. If we start to see a meaningful decline in unemployment rate, then the RBA will start consider hiking rates," he added.
Australia200 May 7 at 01:10 GMT 5444 H: 5454 L: 5439
Australia200 Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 5300 | 5000 | --- | 5500 | --- | --- |
During the early hours of the Asian trading session on Wednesday, the Australia200 Index is drifting lower back below 5450. For most of this year the Australia200 Index has moved well from the lower support level at 5000 up to the multi-year highs above 5500 in the last couple of weeks. Current range: trading just below 5450 around 5446.
Further levels in both directions:
• Below: 0.5300 and 5000.
• Above: 5500.
Economic Releases
- 01:30 AU Retail Sales (ex inflation) (Q1)
- 01:30 AU Retail trade (Mar)
- 12:30 CA Building permits (Mar)
- 12:30 US Non Farm Productivity (Prelim.) (Q1)
- 12:30 US Unit Labour Costs (Prelim.) (Q1)
- 19:00 US Consumer Credit (Mar)