iShares MSCI China ETF
Chinese equities are on fire right now and no more than the MSCI China ETF. Traders can trade this with IG, and despite the ETF being overbought, it has broken above key resistance to be at the highest level since July 2011. Copper is also moving higher and this highlgihts that the various easing and stimulus measures really are filtering through to real assets. The recent reports of ‘pledged supplementary lending ‘ (PSL), which is effectively a new monetary tool aimed at improving credit allocation, have clearly had a positive effect.
Another way of trading the short-term sentiment towards China is through the A50 index. This index is the top 50 Chinese mainland companies with the futures settled in Singapore. This index is also a touch overbought, with the RSI and stochastic indicators at extremes. Still, there has been a strong move in Chinese markets, with Chinese assets firmly on the radar at present.
The Japanese market has broken above the June and July consolidation and looks strong right now. Corporate Japan is in healthy shape and it seems that the market is responding. The bulls will be keen to see a move to the January highs, but certainly short-term momentum favours further upside and remains one of my favourite indices to be long right now. At 09:30 AEST we get Japanese jobless rate and retail sales, with sales expected to fall 0.5% on the year.
EUR/AUD has had a strong move lower from the January high of 1.5832; while the pair looks a touch oversold, rallies look like potential selling opportunities. With sentiment towards China improving, we could see further downside in this pair over the medium term.