Overnight the US dollar fell to a three-week low, even after Federal Reserve officials continue to back the case for higher interest rates this year. With US stocks fluctuating near seven-week highs in light holiday trading, Fed Vice Chairman Stanley Fischer became the latest policy maker to back the case for a year-end increase interest rates.
The Australian market looks set to open flat ahead of a speech by RBA deputy governor Philip Lowe and the latest Chinese trade data release today. Yesterday we saw the market pull back with profit taking from last week’s rally, the market ending the day down 46 points. With the large amount of information and price moves over the last 10 days, and The International Monetary Fund releasing it’s World Economic Outlook in the days ahead, it might be a time for investors to take in some of the information and regroup.
Although we believe this volatility will continue in the short term. We believe that selective buying of quality stocks at the correct price over the long term will help “smooth out the current price moves”. Current best buys remain: Magellan (MGE), Perpetual, Telstra, Slater & Gordon, Qube, Woolworths and Xero.
Figure 1 – US Dollar
