RBA Minutes Hint At QE3
The minutes of the RBA June meeting were more dovish than many were expecting. While the bank acknowledged the global recovery underway and the improvements within the domestic landscape, the RBA reiterated its message that rates will not be raised until inflation is sustained in the 2% - 3% range. Currently, the bank projects this will not be the case until 2024.
The minutes also confirmed that the bank will be providing clarity (at the July meeting) on whether QE will be renewed beyond the current end-of-September deadline. Currently, the tone of the bank’s discussions suggest that an extension of QE will be made, which should keep the ASX supported in the near term. However, if data starts to improve dramatically, this could effect a reversal in the ASX.
Key Data to Watch
On Thursday, RBA governor Lowe will deliver his “From Recovery to Expansion” speech, on the back of the May job’s report. Both of these events have the potential to fuel volatility in the equities markets. If Lowe refrains from any clear signals around QE3 and if the May jobs report is strong, this could dampen the ASX rally.
Technical Views
ASX
The rally in the ASX has seen the index breaking above the 7343.7 level, as the bull channel develops further. Both RSI and MACD are bullish though, with the RSI in overbought territory and the MACD showing bearish divergence, be alert to any reversals lower. If price moves back below the 7343.7 level, 7196.6 an the rising channel low are the next support zones to watch.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.