The Australian dollar looks to be continuing its poor run as of late after capital expenditure data came out today showing a drop to -0.2% Q/Q (1.0% exp). This is a very poor result and one that many will be worried about as the private sector, especially mining, had been one of the major boosters of the economy in recent times. So with the Australian economy certainly not firing on all cylinders it could be a case of weakness for the Australian dollar for some time; even in the face of USD weakness. I would also be surprised to not see the Reserve Bank of Australia comment on this in their next meeting, given how important investment within the private sector is for helping to boost the economy. It could also be a case that fiscal policy in the future is drafted to help stimulate things further but that's a long way off and the AUD bears may look to strike further.
The AUDUSD has continued to slide down the chart falling below the 200 day moving average and is now looking to extend further to 0.7719 to find some support. As the bears are looking more in control expectations are building we could see further pushes down to support levels at 0.7638 and 0.7548 is market conditions do continue. On the flip side, if the bulls do come back into the market they could climb as high as 0.7780 and 0.7864 on the charts. Though I would expect any charge back up the charts to potentially struggle to crack the 200 day moving average, especially if it hangs around key support levels at present.
Equity markets have continued to struggle since Powell's comments yesterday and that's no surprise given they're looking forward to the future and starting to feel like the music could be coming to a halt. For US equity markets though it could not be a case of despair like many fear as from a technical perspective there are still some great opportunities at present, and you can't always count the market out this early on.
For the S&P 500 the technical's are still strong and traders will look to play off them as much as possible even in a bearish market - if that continues. One of the key areas for me to focus on here is the 200 day moving average and support/resistance levels on the way down. The 200 day moving average has been shown to fight back any large bearish movements thus far, and no bear market will be confirmed until we see a large push to go under that, so traders will be focused on this. Additionally, strong support levels can be found at 2698, 2666 and 2628 on the charts and any bearish movements will likely have to battle the bulls on the way down here as well. In the even the bulls do look to take a swing, resistance levels can be found at 2743 and 2807, which is likely to be a very hard level to beat in the current market climate.
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