ASX200: RBA meeting minutes pass - Next data point, AU jobs data

The RBA’s February 1st board meeting minutes were released this morning. As expected, they offered little in the way of new information following recent RBA communique, including Governor Lowe’s National Press Club address and last Friday’s Statement of Monetary Policy.

Jobs 1

The minutes showed that while the RBA was pleased the economy was making progress towards its economic goals, the central bank would remain patient.

“While inflation had picked up, members agreed it was too early to conclude that it was sustainably within the target band.”

Within the final paragraph, the RBA noted that “Wages growth also remained modest, and it was likely to be some time before aggregate wages growth would be at a rate consistent with inflation being sustainably at target.”

Attention now turns to Thursday's jobs data for January, expected to see a 15K fall in employment as economic activity softened following the Omicron outbreak. The unemployment rate is expected to fall to a new cycle low of 4.1%, cushioned by a decline in the participation rate.

Reflecting the low unemployment rate, stronger growth, and inflation numbers in 2022, there are five 25bp interest rate hikes priced into the Australian rates market before the end of the year. The first-rate hike is priced to come in June after the Federal Election in May.

On top of the pricing of rate hikes, the Australian equity market is digesting, amongst other things 1H 2022 earnings reports, surging energy prices, and a possible invasion of Ukraine by Russia. 

This probably explains why the technical picture in the ASX200 is also a little convoluted.  On the Weekly chart below, it appears the ASX200 completed a three-wave correction from the August 7632 high at the 6758 low. The recent rally above 7200 suggests the uptrend has resumed.

ASX200 Weekly Chart 15th Feb

However, on the daily chart, it is possible that the rally from the 6758 low is a corrective Wave iv and that a retest of the 6758 will follow to complete an impulsive five-wave decline.   

ASX200 Daily Chart 15th Feb

As such, we suggest using the 200 day moving average 7327ish as the pivot to keep it clean. Bearish below, bullish on consecutive daily closes above.

Source Tradingview. The figures stated areas of February 15th, 2022. 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

 

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