The XJO is expected to edge lower on open this morning. The U.S was closed overnight. Their futures were fairly flat and they remain so this morning.

Yesterday we managed to hold ground above key resistance/support at 7,300. We pretty much tested 7,350 resistance and rebounded from it intraday to give up roughly a third of our gains into the close. Yesterday’s move also helped reaffirm the short-term uptrend line which has been in play since our recent lows.

At 11:30am (AEST) today, local retail sales numbers will be updated, and at 2:30pm (AEST) we have the RBA cash rate decision. With little news and trading from the U.S overnight, our market may be more sensitive to these releases. Over the past couple of months, most key economic data has come in worse than expected. This has helped keep our market relatively buoyed as the market believes the data-dependent decision making of the RBA will be satiated. Essentially, we want to see retail sales numbers come in worse than expected or by the very least, as expected.

The RBA is largely expected to keep rates on hold today, but of course the market will be looking to future guidance. It is Lowe’s last decision meeting, with Bullock taking over this month. She has been seen as more hawkish, but that may change now that she is captaining the ship.

It is ultimately hard to know how our market will react. If the RBA maintains a tough position, our market may have some profit taking come in, though it seems likely we hold around 7,300 to 7,280 – the range we have been exploring the past few sessions.

Aside from the above, we also have Chinese PMI data at 11:45am. China has been a recent concern for market as the second largest economy shows it has slowed down. We are obviously more sensitive to their economy being tied to it through key exports like Iron Ore.

US Markets

US markets were closed overnight for the Labor Day holiday. US futures were relatively flat on Friday’s close.

Technically, the SP500 is stalling around the resistance at 4,525, which it tested again on Friday. The index may now return to support levels, with the 4,450 level a potential downside target. However, should it rise through the current resistance at 4,525, the next level to the upside would be 4,600.

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