Australian Investment Blog

All eyes on the RBA at 2.30pm Good Morning everyone Overview A fairly quiet night overseas and our FUTURES are up just +2pts…so a tepid open is expected with most waiting around the RBA decision at 2.30pm this afternoon. Obviously no change is expected, however as we wrote yesterday, language around the level of the currency will be the most watched part of the statement. If Glenn Stevens comments about the AUD being too high relative to prevailing economic conditions expect a sharp sell-off in the currency – although we doubt that will happen. Key level for ASX 200

In terms of the broader Aussie market, it’s obviously weak, and its inability to rally, even though the US market has been reasonably strong is clearly a concern. The US market is around 3% off all-time highs, while the Australian market is a massive 27% off its all-time high set in November 2007. We are sitting right on support around 5000, which is the level we had flagged as a potential tipping point in our market. A clear break with some conviction through 5000 on a close basis, should see us correct more aggressively. The issue right now is conviction at that level has been pretty weak and the market seems undecided either way at this juncture. The RBA could be the tipping point today so in our view it’s best to wait, have some cash in the portfolio, and react to the price action around 5000 – once it moves either way with some conviction