15.26 AEST, Wednesday 5 September 2012
Australian market starts low and stays low
By Tim Waterer (Senior Trader, CMC Markets)
What the ECB will or won’t deliver on Thursday remains the point of great conjecture however there is enough chatter
that Draghi will have something to show for all his efforts, and this is keeping traders interested in holding Euro
positions despite the potential room for downside disappointment.
Elsewhere, traders seemed to take an orthodox interpretation of the soft US manufacturing data by treating this as a
negative development. On another day, such a result may well have prompted a positive reaction by the markets as it
would be seen as bringing QE3 one step closer to fruition.
There has been no shortage of obstacles for the AUD to face in recent times. Slumping iron ore prices, question marks
over Chinese economic health and a soft patch of domestic indicators have combined to take considerable lustre off the
Aussie Dollar. Instead of enjoying hovering in the 1.05-1.06 range as it was one month ago, the currency is now having
its work cut out staying above 1.02. The latest GDP print did not miss the mark by too much (+0.6% vs +0.8% forecast)
but it was enough to show that the pace of growth is far from setting the world on fire. With Retail Sales, and GDP
coming up short of expectations so far this week, if we see Thursdays jobs numbers follow suit a dip in the AUDUSD rate
to the low to mid 1.01’s is looking on the cards.
The Australian sharemarket started low and stayed low, with our mining heavyweights again showing their susceptibility
to the current downturn in iron ore prices. The tale of woe amongst the mining sector was the dominant theme of the day
with the likes of BHP and RIO trading well into negative territory, whilst yet another round of sub-par Chinese data did
little to instil traders with any confidence. It was certainly a very defensive based mindset of traders today who are
again getting jittery about the global state of affairs.
ends