The Trade: navigating Nasdaq and ASX 200 trends amid inflation

(AI video summary)

This video was created on 30 October for IG audiences by ausbiz.

IG's Tony Sycamore provides a technical analysis on how Nasdaq 100 tech earnings and ASX 200 trends influence trading strategies. In adiition, the impact on Australian dollar dynamics amid geopolitical events, particularly the US election.

Inflation rate impacts and trading strategies

Traders are keeping a close eye on inflation data for signs of potential interest rate cuts by the Reserve Bank of Australia (RBA). Recent figures indicate a cooling trend, with expectations for the trimmed mean inflation to rise by 0.7% for the quarter. If the annual rate decreases to 3.4% from 3.9% as anticipated, it might allow the RBA to consider a rate cut before the end of the year. However, market pricing currently reflects only a 30% chance of this happening, though some analysts believe the odds should be closer to 50%.

Stock market analysis: Nasdaq and ASX 200

The Nasdaq index is a major focus for traders, especially with significant tech companies announcing their earnings. Recent performances from companies like Alphabet and Tesla have pushed the Nasdaq towards its yearly high. The index has maintained key technical support at the 20,000 level, indicating the potential for further growth. Breaking this level could lead to a rally towards 21,500, depending on continued positive earnings reports and the outcome of the upcoming US election.

In contrast, the ASX 200 has shown more modest movements, described as a 'grind' above its crucial support level of 8100. Without the large tech influence present in the Nasdaq, the ASX 200's direction depends more on broader economic factors. Currently, the index is consolidating below resistance at 8378, awaiting a breakout to determine its next move.

Currency market dynamics: Aussie dollar trends

The Australian dollar has faced difficulties, dropping 5% in October amid a stronger US dollar and market speculation around the US elections. A potential Republican victory has supported the US dollar's strength, though there is room for volatility based on election results. A Democratic win could quickly propel the Australian dollar back up towards $0.68. Traders should consider geopolitical factors and central bank actions when planning their currency market strategies.

Whether you are managing equities, currencies, or commodities, understanding the interplay of inflation data, technical analysis, and geopolitical events can improve your trading performance. Investors interested in improving their trading strategy might explore IG's advanced trading platforms.