Chart of the day - AUS200 (11.01.2023)

A pack of Australian data for November has been released during an otherwise quiet Asian session. Data turned out to be better-than-expected with retail sales increasing 1.4% MoM, instead of an expected 0.7% MoM increase, and CPI inflation accelerating from 6.9 to 7.3% YoY. Core inflation accelerated from 5.3 to 5.6% YoY. Such an outcome shows that consumers are still faring quite well and no slowdown in inflation gives reasons to continue monetary policy tightening. While RBA hinted that it may pause its tightening cycle soon, markets is now pricing an over-60% chance of a 25 bp rate hike in February. Unsurprisingly, AUD reacted positively, gaining against all other major peers. In spite of tightening being seen as negative for stocks,  S&P/ASX 200 (AUS200), Australian blue chips index, was quite resilient and managed to post a solid 0.9% gain today.

Taking a look at AUS200 at D1 interval, we can see that the index is recovering from a recent downward correction that was halted at 50% retracement of the upward impulse started in mid-June 2022. Index is attempting to make a break above the resistance zone marked with previous price reactions and 23.6% retracement in the 7,125 pts area. A break above would pave the way for a test of previous local high slightly below 7,400 pts mark.

Source: xStation5