Tuesday, July 7, 2009

RBA on Hold, AUD, Commodities and RIO

The markets are searching for direction and acting like a hangover from drinking too much the night before.
Not much volatility in the overall index, so I haven't found a good intraday trade.

Miners are down on commodity prices falling and financials slightly up. I'm assuming that the current AUD strength will also keep a cap on the profitability of the likes of RIO and BHP.

RBA keeps the interest rates at 3% and the AUD/USD gave a headfake to the downside before moving up - basically calling the bluff on the RBA statement that there's a good chance that they might ease rates in the future given the low inflation prospects.
However, the RBA has remained optimistic about Australia's economic fundamentals - trully a mixed signal to traders; are they saying we're going to the doghouse or they saying we are in recovery mode? If the professional economists don't know, how the heck are amatuers traders to have any idea?

I'm currently looking to short RIO or BHP and here is the RIO chart, which has formed a nice downside pattern - and is on the verge of breaking to the downside.

I do believe we'll see lower prices in the next few weeks - it's a matter of how the ebbs and flows of news will get us there.