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Worrying signs as China exports fell 0.3%

Four key markets in focus today.

AUD/USD

In early interbank trade, AUD/USD found sellers, with China releasing its September trade balance on Sunday. The worrying issue here is exports fell 0.3%, when the market expected growth of 5.5%; it seems to be taking this as a sign that external demand is low, thus many are questioning the global recovery. China will remain fully in focus this week given the raft of data releases due, while it is also worth keeping an eye on Washington, with no concrete deal coming out of the Senate thus far. At 11:30 today we get home loan data and the market expects a fall of 2.5% - hardly thematic of a housing bubble. Given the sideways trade, I feel the best way to play AUD/USD could be using Bollinger bands and therefore I’d be a potential buyer at 0.9311 and seller at 0.9510.

Germany 30 (DAX)

The DAX failed to print a new all-time high on Friday, despite optimism sweeping through the region. It will be interesting therefore to see if the index can break the September 19 high of 8770, although at this stage that looks tough given the lack of progress seen in Washington. In European trade we get the latest eurozone composite read on industrial production.

China A50 cash

The China index traded 1.6% higher from the open on Tuesday, although it could struggle today given the poor September trade balance. I feel this index requires close attention this week given we get the latest read on inflation today (expected to increase 2.8% year-on-year), and through the week industrial production and Q3 GDP (on Friday and expected to grow 7.8%).

JP Morgan (JPM)

I’ve been looking at longs of late and the trade seems to be working quite well. It’s quarterly earnings report highlighted a loss of $0.17 per share, but this was due to a $9.3 billion legal provision. The stock rallied to $53.35, shy of my target of $54.00 and I would stay long, pulling up stops to $51.95 (below the recent downtrend drawn from $56.78). Citigroup reports tomorrow, although I suspect price action will take its cues from the debt ceiling debate.

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