EUR/AUD turns higher, ASX 200 falters on sluggish Australian growth

Australian GDP slowed to a 4-year low of 0.8% y/y, down from 1% in Q2 and missing its estimate of 1.1%. And while GDP q/q rose at its fastest quarter in four, it also missed its estimate of 0.5%. I had a hunch the data would be miss given weak data released earlier in the week, which saw housing approvals and company profits also miss the mark on Monday. And while retail sales delivered an upside surprise of 0.6%, I strongly suspect we’ll see weak data for December on the assumption shoppers brought forward their purchases for the Black Friday sales again this year.

While this will no doubt result in further calls for the RBA to cut rates, I doubt they will soon. Inflation remains too high and the employment figures remain robust. However, rates traders are pricing in cuts, with the RBA 30-day cash rate futures implying as 70% chance of a cut in April. A cut s fully priced in by June and 50bp of cuts have been priced in by October.

EUR/AUD technical analysis

A false break of its June low quickly reversed to see EUR/AUD print a strong 3-day rally. Prices drifted lower over the next four days in a corrective fashion, the last of which was a doji at the weekly pivot point. We have since seen bullish range expansion to suggest a swing low could be in place.

A measured move from the supposed bull flag sets an upside target around 1.65. However, since bull flag are really supposed to appear in uptrends, I’d prefer a more conservative target around the 91.8% projection, which lands around the 200-day SMA and weekly S1 pivot.

Bulls could seek long setups within today’s range, using a break of Thursday’s low as an invalidation point for the bullish bias.

ASX 200 futures (SPI 200) technical analysis

The ASX 200 finally printed a daily close above 8500 on Tuesday reached a record high. Yet today’s weak GDP figures have seen a swift reversal and erased all of yesterday’s gains, which once again shows the significance of 8500 as resistance.

Still, the November VPOC (volume point of control) is nearby at 8348 for a potential support level. And as unsatisfying as this rally is, the ASX does keep grinding higher with a few shakeouts along the way. Whether it can regain its footing and print a new high this week, or embark upon a deeper correction is likely now down to the performance on Wall Street.

For now, I assume dip buyers will seek to return while prices hold above 8400, a break of which then brings 8350 and 8300 into focus for bears.

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please ensure you fully understand the risks involved by reading our full risk warning.

FOREX.com is a trading name of StoneX Europe Limited, and FOREX.com/ie is a domain operated by StoneX Europe Ltd, a member of StoneX Group Inc. StoneX Europe Ltd, is a Cyprus Investment Firm (CIF) company registered to the Department of Registrar of Companies and Official Receiver with a Registration Number HE409708, and authorized and regulated by the Cyprus Securities & Exchange Commission (CySEC) under license number 400/21. StoneX Europe is a Member of the Investor Compensation Fund (ICF) and has its registered address at Nikokreontos 2, 5th Floor, 1066 Nicosia, Cyprus.

StoneX Europe Limited is registered with the German Federal Financial Supervisory Authority (BaFin). BaFin registration ID: 10160255

FOREX.com is a trademark of StoneX Europe Ltd, a member of StoneX Group Inc.

The statistical data and the awards received refer to the Global FOREX.com brand.

This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy.

Through passporting, StoneX Europe is allowed to provide its services and products on a cross-border basis to the following European Economic Area ("EEA") states: Austria, Bulgaria, Croatia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.

Additionally, StoneX Europe Ltd is allowed to provide Investment and Ancillary Services to the following non-EU jurisdiction: Switzerland.

StoneX Europe Ltd products, services and information are not intended for residents other than the ones stated above.

Tied Agent Information: KQ Markets Europe Ltd with Company No. HE427857.
Address: Athalassas 62, Mezzanine, Strovolos, Nicosia Cyprus.
Services Provided: Reception and Transmission of Orders.
Commencement Date: 06/12/2022
Website: KQ Markets - CFD Trading | KQ Markets

We may pay inducements, such as commissions or fees, to affiliates or third-party introducers for referring clients to us. This is in line with regulatory guidelines and fully disclosed where applicable.

StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation. StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.