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Year-End Rally Yes, But In Aussie Dollar And Copper

By CMC Markets (Ric Spooner)Market OverviewDec 28, 2017 11:06
au.investing.com/analysis/yearend-rally-yes-but-in-aussie-dollar-and-copper-200197096
Year-End Rally Yes, But In Aussie Dollar And Copper
By CMC Markets (Ric Spooner)   |  Dec 28, 2017 11:06
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Originally published by CMC Markets

If yesterday is any guide, the S&P/ASX 200 looks set to end the year in drift mode. This will leave the question of where to next open until at least next week.

Those looking for a year- end rally have not been entirely disappointed. The Aussie dollar has risen to the occasion, spurred by strong metal prices and US dollar profit taking.

The US dollar had a significant move to the downside last night, fuelled by lower bond yields. Traders are looking through recent signs of strength in the US economy with a buy the rumour; sell the fact reaction to the tax cuts continuing to play out.

Recent strength in the US economy was on display in the December Consumer Confidence Index released last night. Although it fell below the stellar readings of November and December, the trend remains strong. Consumers are feeling good about the improving job market; tax cuts; low interest rates and strong stock and property markets. This bodes well for a solid base to consumer spending in 2018

Yesterday’s news that Chinese authorities have halted production by Jiangxi Copper (SS:600362) for a week sent the metal to a new high for the year. It seems increasingly likely that production cuts to protect the environment are going to be an ongoing feature of the metals market landscape. This will provide support for both mining stocks and the Aussie dollar

Ongoing short covering in Retail Food Group (AX:RFG) has been a feature of the stock market in recent days. The fact that the company has extended its credit facilities indicates a vote of confidence by the banks and may allay the worst expectations of shorts who held 11.95% of the stock at the latest report. The 38.2% Fibonacci retracement level at $2.76 looms as the next feature on the chartist’s landscape for this stock.

Year-End Rally Yes, But In Aussie Dollar And Copper
 

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Year-End Rally Yes, But In Aussie Dollar And Copper

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