This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
The Ukraine situation has also remained an issue for risk assets. In a clear sign that investors are unsettled, copper has taken over from iron ore as the sellers’ commodity of choice.
Talk of lifting margins for Shanghai copper futures along with growth fears have been the key factors weighing on the commodity. Shanghai copper is down 4.5% since the close of yesterday’s trade. This move in copper prices also took down commodity currencies like the AUD and CAD, along with emerging market currencies. The TRY, MXN, BRL, ZAR all lost ground to the greenback.
Key near-term support being tested
After having held remarkably well yesterday, AUD/USD has finally given up its grip on the 0.90 handle as the bad news continues to mount. The pair even held despite disappointing NAB business confidence and conditions data yesterday.
AUD/USD was holding at 0.897 ahead of Westpac consumer sentiment and home loans data today. Both readings disappointed, but AUD/USD just managed to hold its ground at 0.896. This level also happens to be short-term support in an uptrend from February 1 through March 3 on the daily chart. It is also the 38.2% retracement of the recovery from January lows to March highs just above 0.91. As a result this will be a real test for the bulls in the near term to see if this level will be defended.
Tomorrow will be a key day of data with local jobs numbers due out along with China’s industrial production. The market is looking for a 9.5% rise and a miss in this data could trigger a significant slide in commodities and the AUD.