European equity indices update: renewed pressure for the FTSE and DAX
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10/06/21 10:53
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Charting the Markets: 06 June Dow and Nasdaq 100 look to move higher but Hang Seng struggles. EUR/USD volatility diminishes while AUD/USD rallies on RBA rate hike and USD/JPY slips. And Brent crude oil slips while gold and silver stabilise. Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Tuesday 06 June 2023 This is here for you to catch up but if you have any ideas on markets or events you want us to relay to the TV team we’re more than happy to. -
Greetings fellow traders! Today, I wanted to delve into a crucial topic in the world of forex trading: the key differences between fundamental analysis and technical analysis, and how traders employ these approaches to make informed trading decisions. Fundamental analysis focuses on evaluating the intrinsic value of a currency by analyzing economic, political, and social factors. Traders employing this approach examine macroeconomic indicators, such as interest rates, GDP growth, inflation, employment data, and geopolitical events. By assessing the fundamental factors driving supply and demand, traders aim to determine the fair value of a currency and identify potential trading opportunities. On the other hand, technical analysis primarily revolves around studying historical price patterns, chart formations, and statistical indicators. Traders employing this method analyze past price movements and patterns to forecast future price behavior. They utilize tools like moving averages, support and resistance levels, trend lines, and oscillators to identify trends, reversals, and entry/exit points. While fundamental analysis emphasizes the "why" behind price movements, technical analysis focuses more on the "what" and "when." Traders employing fundamental analysis seek to understand the underlying factors driving currency value, while technical analysts focus on interpreting price patterns and indicators to predict future market movements. Traders utilize these approaches in various ways to make informed trading decisions. Fundamental analysis helps traders identify long-term trends and assess the overall health of an economy. By examining economic indicators, monetary policies, and geopolitical events, traders can anticipate major market shifts and adjust their positions accordingly. Technical analysis, on the other hand, aids traders in identifying short-term opportunities. By analyzing historical price data and utilizing technical indicators, traders can spot entry and exit points, determine stop-loss and take-profit levels, and manage risk effectively. In practice, many traders combine both fundamental and technical analysis to form a comprehensive trading strategy. They use fundamental analysis to identify long-term trends and establish a general bias, while technical analysis helps with precise entry and exit timing. It's important to note that no single approach guarantees success in forex trading. Each approach has its strengths and limitations, and traders should choose the one that aligns with their trading style and preferences. I'm eager to hear your experiences and insights on utilizing fundamental and technical analysis. Let's discuss and enrich our understanding of these powerful trading tools! -
Ignoring market expectations for a hold, the RBA hikes rates for the twelfth time in thirteen months, intensifying the scrutiny on economic data and heightening concerns for the struggling ASX 200. Source: Bloomberg Indices Inflation Market Data Consumer price index Interest rate Tony Sycamore | Market Analyst, Australia | Publication date: Tuesday 06 June 2023 At its board meeting today, the Reserve Bank of Australia raised its official cash rate by 25bp to 4.10%. Once again, the RBA's twelfth rate rise in thirteen months caught the interest rate market on the wrong foot; the market had priced in an 80% chance of a 'hold' outcome. Last month, after surprising the market with a rate rise by 25bp to 3.85%, the RBA noted that inflation remained too high. It issued a warning that further rate increases might occur, depending on economic and inflation trajectories. RBA prioritises inflation management Choosing to disregard softer data in May across the Wage Price Index, labour market data, retail sales and building approvals, the RBA refocused its attention on the upside surprises in the monthly CPI indicator and the wage increase at the Fair Work Commissions Review. This move aligned with the Path of Least Regret, as anticipated here. Today's decision was influenced by a repeated note on inflation from last month's statement, in which the RBA underscored the significance of keeping inflation expectations stable, stating, "Inflation in Australia has passed its peak, but at 7 per cent, it remains too high. It will be some time yet before it re-enters the target range." The RBA maintained its tightening bias and noted that further rate hikes could occur, depending on incoming data. "Some further tightening of monetary policy may be required to ensure that inflation returns to the target within a reasonable timeframe, but that will depend upon how the economy and inflation evolve." Key data points to determine RBA's next move The following incoming data will be closely scrutinised for clues around when and how much further the RBA might tighten. RBA Governor Lowe's speech: Wednesday, 7 June at 09:20 am AEST Q1 2023 GDP: Wednesday, 7 June at 11:30 am AEST (preview available) Labour force report for May: Wednesday, 15 June at 11:30 am AEST RBA Meeting Minutes: Tuesday, 20 June at 11:30 am AEST Monthly CPI indicator for May: Tuesday, 28 June at 11:30 am AEST Retail sales: Thursday, 29 June at 11:30 am AEST The interest rate market is 80% (19bp), priced for another 25bp hike to 4.35% by the September RBA Board Meeting. What happened to the ASX 200? Today's RBA rate hike is another RBA hammer hit to the ASX 200, already trading 36 points lower at 7180 (-0.5%), before the meeting following a weak lead from offshore markets. Post the announcement, the ASX 200 dropped another 55 points to a low of 7125, led by the Consumer-facing Discretionary (-2.1%) and Staples (-1.14%) Sectors. Also weighing on the index, a 1.3% fall in the heavyweight Financial Index, heavily exposed to struggling households facing cost-of-living pressures and rising interest rates. A break of support at 7115 (the 200-day moving average) and last week's 7077 low would be problematic and lead to a test of year-to-date lows at 6900. ASX 200 daily chart Source: TradingView TradingView: the figures stated are as of June 6, 2023. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.
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