Saxo Bank | Mar 04, 2015 01:46AM ET
Overnight
US and European stocks retreated last night in the absence of fresh catalysts for buyers. European stocks closed lower Tuesday, as investors favoured a cautious approach ahead of a European Central Bank monetary policy meeting this week.
The Euro Stoxx 600 index closed 0.9% lower, reversing earlier gains of about 0.2%, which came on the back of figures showing German retail sales rose much faster than expected in January. The UK's FTSE 100 index closed down 0.74%, Germany’s DAX and the French CAC closed down 1.14% and 0.98% respectively.
US stocks pulled back in light volume trade, as investors weighed soft auto sales and looked ahead to domestic data.
The Nasdaq closed down 28.2 points, or 0.56%, at 4,979.90. The Dow Jones Industrial Average briefly fell more than 150 points in early afternoon trade on Tuesday before recovering to close down 85.2 points, or 0.47%, at 18,203.37. The S&P 500 closed down 9.61 points, or 0.45%, at 2,107.78, with healthcare the greatest laggard and utilities and energy the only sectors advancing.
Brent oil rose 1% overnight as Saudi Arabia increased its official price for buyers.
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AUD/USD
Unfortunately we were wrong about the rate cut call yesterday, however RBA continued to indicate easing bias in the statement hence we remain bearish on AUDUSD despite its 90 pips rally following the rates decision. Since then the AUDUSD found strong resistance yet again at 0.7850 and if positive GDP figures come out today (11:30am), then this resistance would be broken through, although we expect a soft outcome as the last three quarters indicated declining trends.
Sell AUD/USD
Entry: Limit 0.7841 Target: 0.7778 Stop loss: 0.7853
It was unfortunate that yesterday’s trade set-up missed both entry and profit targets by only a few points. (2 points on entry and 3 points on profit target). The S&P/ASX200 looked like they were going to touch the 6,000 level but after the rate announcement, the it dropped 75 points in a matter of minutes. This shows how important another rate cut is to further gains to break through 6,000.
Unless today’s GDP comes out surprisingly strong, we may see some more weakness with the resistance level at 5,944.
Buy S&P/ASX200
Entry: Limit 5,943 Target: 5,909 Stop loss: 5,958
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