RBA preview and what comes next for the ASX200?
At its last scheduled monetary policy meeting for 2021, the RBA tomorrow will likely keep interest rates on hold at 0.1% and reiterate that interest rates are unlikely to rise until inflation is sustainably back within its target band.
Share this:
As such, most interest will be in the Board's commentary around the stronger than expected Q3 GDP print and discussions around potential disruption to the outlook from the Omicron variant and high inflation.
While the Australian interest rate market remains priced for rates “lift-off” by mid-2022 and has almost three rate hikes priced before the end of 2022, tomorrow's RBA meeting isn’t likely to provide much gratification for overly eager bond traders.
Turning now to the ASX200, a hawkish Fed pivot, high inflation, and the latest Covid-19 variant, Omicron, have created an unstable mix of growth and policy tightening concerns for Australian equity investors. In response, the ASX200 closed lower last week, for a fourth straight week.
For traders that have come to expect the ever-reliable Christmas rally, more information around Omicron's transmission rates, the efficacy rate of existing vaccines, and the virus's severity are first needed before the rally can take hold.
Presuming research confirms early reports that Omicron is more transmissible but results in milder cases, the ASX200 will likely springboard higher from the 200-day moving average at 7230, where it is attempting to base and retest the August 7632 high.
Until then, the market remains susceptible to headlines. A retest of the September 7145 low is possible with scope towards wave equality and psychological support at 7000 before the correction is complete.
Source Tradingview. The figures stated areas of December 6th, 2021. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation
How to trade with City Index
You can trade with City Index by following these four easy steps:
- Open an account, or log in if you’re already a customer
• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
- Search for the company you want to trade in our award-winning platform
- Choose your position and size, and your stop and limit levels
- Place the trade
As such, most interest will be in the Board's commentary around the stronger than expected Q3 GDP print and discussions around potential disruption to the outlook from the Omicron variant and high inflation.
While the Australian interest rate market remains priced for rates “lift-off” by mid-2022 and has almost three rate hikes priced before the end of 2022, tomorrow's RBA meeting isn’t likely to provide much gratification for overly eager bond traders.
Turning now to the ASX200, a hawkish Fed pivot, high inflation, and the latest Covid-19 variant, Omicron, have created an unstable mix of growth and policy tightening concerns for Australian equity investors. In response, the ASX200 closed lower last week, for a fourth straight week.
For traders that have come to expect the ever-reliable Christmas rally, more information around Omicron's transmission rates, the efficacy rate of existing vaccines, and the virus's severity are first needed before the rally can take hold.
Presuming research confirms early reports that Omicron is more transmissible but results in milder cases, the ASX200 will likely springboard higher from the 200-day moving average at 7230, where it is attempting to base and retest the August 7632 high.
Until then, the market remains susceptible to headlines. A retest of the September 7145 low is possible with scope towards wave equality and psychological support at 7000 before the correction is complete.
Source Tradingview. The figures stated areas of December 6th, 2021. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation
- Open a Forex.com account, or log in if you’re already a customer.
- Search for the pair you want to trade in our award-winning platform.
- Choose your position and size, and your stop and limit levels.
- Place the trade.
Related tags:
Latest market news
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
Nasdaq 100 Forecast: Confidence Returns as the Index Challenges Record Highs
The trading week is getting underway with renewed bullish momentum across Nasdaq. This is reflected in today's session, where the index has gained more than 2.5%, highlighting a buying bias that has not been observed with this level of strength in several weeks.
Dow Jones Forecast: Is a New Bearish Bias Emerging Around the DJIA?
Over the past few trading sessions, price action in the Dow Jones Industrial Average has started to show consistent signs of weakness. In fact, the index has already posted a decline of nearly 1.00% over the last five trading days, a development that is beginning to reveal a bearish bias or, at the very least, growing caution across the market.
AUD/USD Breakout Builds as Yen Strength Softens the Dollar
AUD/USD is trading at its highest since early May, with the yen’s continued rally helping soften the dollar and amplify the Aussie’s upside response.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.