In a surprise move earlier this morning, the Central Bank of Australia raised its rates from 3.0% to 3.25%. This is a big shift in the focus from putting more liquidity into the markets to working on removing liquidity, with Australia the first to act. The rationale for Australia has been that their economy has been benefiting from growth in China, which has returned their economy to growth. In Canada, we are very dependent on recovery in the United States. The following table shows the current rates for the major currencies.
The initial reaction to the rate hike has been to see the value of the Australian dollar rise, and gold has also risen this morning. What does this mean in terms of inflation?
Canadian Building permits were higher than expected at 7.2% vs. the estimate of 5% for August. In addition, the Canadian Richard Ivey Purchasing Managers Index (PMI) will be reporting later today. There are no major economic reports coming out in the US today.
In terms of market action expectations for today, the market condition scans are showing a positive bias, which suggests a positive close. The futures and the DAX are positive, indicating a positive open. With the commodities rising, with gold, silver, and oil up, we should also see a positive day on the TSX.
Index | Change | %Change | Level | Phase |
TSX | +144.29 | +1.32% | 11102.62 | Bullish |
DJIA | +112.08 | +1.18% | 9599.75 | Bullish |
Nasdaq | +15.25 | +1.49% | 1040.46 | Bullish |
SP 500 | +20.04 | +0.98% | 2068.15 | Bullish |
Russell 2000 | +10.91 | +1.88% | 591.11 | Bullish |
NYSE | +120.56 | +1.81% | 6795.13 | Bullish |
Source: Telechart
Short Term market outlook:
Bias: Scans showing a positive bias
Energy: moderate
Primary Trend: sideways
Sector | Phase |
Consumer Staples | Bullish |
Healthcare | Bullish |
Technology | Bullish |
Utilities | Bullish |
Energy | Bullish |
Financials | Bullish |
Industrials | Bullish |
Materials | Bullish |
Consumer Discretionary | Bullish |
Source: Telechart
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