Global Markets Overview – June 17, 2014

After a downbeat European session, sentiment managed to recover in US trade, despite a continuation of Iraq concerns. There was some positive data out of the US including the Empire State manufacturing index, industrial production and the NAHB housing market index. However, investors seem to be looking ahead to the Fed meeting. The IMF was also on the wires downgrading the US growth forecast for 2014 to 2% (from 2.8%) and maintained 2015 growth at 3%. Major currency pairs just continue to hold tight ranges with uncertainty remaining the dominant theme.

Gold retreated from its highs in Asian trade after encountering a downtrend resistance which has been in place since April. The downtrend came in at around 1282 and the precious metal failed to close above this level. This could result in a near-term reversal to the downside. The yen was surprisingly subdued and even a round of impressive US economic data wasn't enough to push USD/JPY any higher.

Monetary policy minutes in focus

The AUD will be back in focus today ahead of the RBA's monetary policy meeting minutes from the June 3 meeting. In the statement the RBA highlighted the exchange rate remains historically high, particularly given the further decline in commodity prices. However, given the local economy is looking to rebalance away from the mining sector dependence, perhaps this notion will slowly start to change.

Additionally it seems the moves in AUD/USD recently have been to do with low US yields. As a result, it is hard to position on RBA rhetoric alone. Most analysts feel RBA intervention is unlikely anytime soon. From a rates perspective, an increasing number of analysts are abandoning rate cut calls with Macquarie being the latest one to do so. Macquarie has moved from expecting a Q4 rate cut to a rate hike in Q1 of 2016.

Another flat open for the ASX 200

Ahead of the local market open, we are calling the ASX 200 down a couple of points to 5410. A slight positive is the fact the market managed to recover from the lows yesterday and finished the day in the black. This is generally encouraging as far as momentum goes. However, no doubt focus will be on the further slide in iron ore prices to 89. This will be the first time iron ore has traded below 90 since September 2012 when we went on to test a low of 86.70.

FMG recovered yesterday after announcing a US$275 million investment in ships and some bargain hunting after testing $4. However, AGO is yet to see a bottom and just continues to struggle to find its footing. Gold miners might give back some of their recent gains today after the pullback in the precious metal. Worley Parsons had a great day yesterday on the back of a JP Morgan upgrade and its energy exposure. Traders could look to eye $17.50 in the near term as it is the resistance from the November 2013 gap.

Asian markets opening call	Price at 8:00am AEDT	Change from the Offical market close	Percentage Change
Australia 200 cash (ASX 200)	5,410.00	-2	-0.04%
Japan 225 (Nikkei)	14,942.50	10	0.06%
Hong Kong HS 50 cash (Hang Seng)	23,260.40	-41	-0.17%
China H-shares cash	10,481.10	-31	-0.29%
Singapore Blue Chip cash (MSCI Singapore)	373.60	-0	-0.02%
US and Europe Market Calls	Price at 8:00am AEDT	Change Since Australian Market Close	Percentage Change
WALL STREET (cash) (Dow)	16,773.50	44	0.26%
US 500 (cash) (S&P)	1,937.07	6	0.33%
UK FTSE (cash)	6,768.40	3	0.04%
German DAX (cash)	9,899.60	15	0.16%
Futures Markets	Price at 8:00am AEDT	Change Since Australian Market Close	Percentage Change
Dow Jones Futures (June)	16,775.00	32.00	0.19%
S&P Futures (June)	1,936.38	6.25	0.32%
ASX SPI Futures (June)	5,410.50	4.00	0.07%
NKY 225 Futures (June)	14,973.00	-7.00	-0.05%
Key inputs for the upcoming Australian trading session (Change are from 16:00 AEDT)	Price at 8:00am AEDT	Change Since Australian Market Close	Percentage Change
AUD/USD	$0.9402	-0.0003	-0.03%
USD/JPY	¥101.835	0.005	0.00%
Rio Tinto Plc (London)	£31.08	0.90	2.98%
BHP Billiton Plc (London)	£18.85	0.35	1.89%
BHP Billiton Ltd. ADR (US) (AUD)	$35.65	0.10	0.29%
Gold (spot)	$1,272.50	-9.78	-0.76%
Aluminium (London)	1854.25	11.00	0.60%
Copper (London)	6685	43.00	0.65%
Nickel (London)	18734	654.00	3.62%
Zinc (London)	2107	20.75	0.99%
Iron Ore (62%Fe)	89	-1.90	-2.09%