The market responded to the Fed hike gradually overnight, with USD strengthening across the board and other main currencies as well as commodities underperforming. It seems like investors are carrying out “buy the rumor, buy the fact” this time after the FOMC. Obviously the median dot point for 2016 has been taken as positive factors regardless of the priced-in 25 basis point hike in the fed funds rate.
Overnight, the US initial unemployment claims improved by 11k from 282k to 271k. The Philly Feb Manufacturing Index, however, decreased to -5.9 from 1.9 last month, which is weaker than expected. EUR fell to 1.0806 from 1.0875. German business confidence was unsatisfactory. USD/JPY rose by 54 pips. AUD dropped heavily to 0.70960 and pulled back to 0.71296. Oil dropped below $35 level. Gold and silver reached around the lowest level in recent years.
The Deutsche Bank said: “The multi-year strong USD cycle should extend for at least another 2 years, with a further 10% appreciation in the real broad USD TWI. n In macro terms, how 2016 shapes up will be heavily influenced by whether the main macro driver is the Fed or China. If Fed tightening is the driver, USD gains are seen as likely to be slow and broad-based, spread fairly evenly between G4 majors, commodity FX and EM FX. If on the other hand, China, particularly China FX policy becomes a source of instability, USD gains will be heavily concentrated in commodity and EM FX, while the G4 majors all outperform.”
SPI 200(ASX)
Pivot: 5055
Our preference: short @ 5018 with targets @ 4960 & 4920 in extension.
Alternative scenario: above 5055 look for further upside with 5095 & 5130 as targets.
Comment: the RSI is bearish and calls for further downside.
Supports and resistances:
5130
5095
5055
5018 Last
4960
4920
4890
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