A cautious start | CMC Markets Daily Commentary
Market sentiment swings to cautious mode on Tuesday as investors awaits for trade news and fresh catalysts. A marginal gain in US equity indices overnight is hardly convincing for Asian investors to join the risk-hunting.
Gold price nudged higher to US$ 1,474, from recent low of US$ 1,448. This is partially boosted by a declining US dollar as well as general risk-aversion sentiment. USD/CNH – an indicator of trade deal – moved higher to 7.032 area this morning, reflecting cautiousness in trade progress.
PBoC yesterday has unexpectedly lowered 7-Day MLF rate to 2.50% from 2.55%, a mini step of easing. An impulsive move in China’s inflation as a result of soaring meat price has inhibited PBoC’s ability to carry out large-scale of easing. Recent industrial production and retail sales growth, however, suggest more stimulus is needed to revitalise growth.
AUD/USD resumed its downward trajectory and hit 0.679 ahead of the release of RBA meeting minutes. The meeting minutes is expected to confirm RBA’s stance to hold with a readiness to ease further if needed. A dismal Oct jobs report and soft retail sales data allows traders to speculate more rate cuts in the coming months. Technically, AUD/USD sees a key support level at 0.677 area (61.8% Fibonacci Retracement).
Singapore market posit to consolidate after Monday’s rally, alongside with the rest of Asia. Sector wise, financials, developers, technology and industrial are subjected to profit-taking, whereas REITs, consumer staples are more defensive.
Hang Seng Index set to open 120 points lower today, erasing part of Monday’s gain. Immediate support level remains at 26,400 (61.8% Fibonacci Retracement) and immediate resistance level can be found at 26,700 area. Order book for Alibaba’s HK IPO have received multiple times oversubscription, which will pave way for a successful launch for HK’s largest IPO in over 9 yearsa.
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