10th February 2015 – Daily Currency Market Report.

The market in brief:

  • AUD closes the gap and pushes on
  • NZD back at 2 week highs
  • RBA Governor Stevens again not as dovish as feared
  • G20 meetings get under way
  • UK “prepares for Grexit”
  • German trade surplus at a record high
  • Commodities rally but equity markets are mixed

Market moving events for the next 24 hours:

  • Australian Business Confidence
  • Chinese Inflation
  • UK Manufacturing
  • G20 meetings finish

AUD-USD: As forecast in yesterday’s report, the Australian Dollar closed the gap created over the weekend as RBA Governor Stevens’ speech was not as dire as some had thought and as commodities rallied with Crude Oil up 2.7% to 53.91, whilst Gold gained 8 bucks to 1,241. The lack of US data and no serious developments elsewhere also encouraged the move. Today’s Business Confidence will be important, but likely overshadowed by Chinese inflation numbers that are expected to ease back from last month’s +1.5%. Looking to the charts and we are back at resistance that acted as support for the latter part of January. Solid data should see a break higher, however those with foreign currency to buy may not want to gamble and book their transfers in this morning

AUD-EUR: The Euro started the week on the front foot, although continued squabbling between Greece and the EU, as well as Cyprus getting in on the act and the Ukraine situation bubbling away meant the common currency lost further ground during our day. The best ever German trade surplus halted the rally and the move was partially reversed. The G20 meetings finish up today and the market will be nervous ahead of the official communique. Be wary of rumours and some potential volatility, however we continue to hold our view of higher levels and a target of the 50% retracement of the month long rally that started in midDecember and sits 60 points above.

AUD-GBP: The Pound held firm against the US Dollar which meant the Australian Dollar took the initiative and has this pair at highs not seen since the middle of last week. Tonight’s UK Manufacturing data should create some sizeable price action and with expectations of a weaker print we’d favour this pair drifting higher and away from the bottom of this downward channel.

AUD-JPY: The Yen lost the ground it made over the weekend and early Monday morning as the Australian Dollar benefited from the higher commodity prices and as the Japanese currency took a hit due to the increase in the oil price. The upside bias is held.

AUD-NZD: The Tasman Cross was sold off as the increase in risk appetite favoured the NZ dollar and as NZD exporters booked in their deals they missed due to Friday’s holiday. There is nothing of note due from NZ until next week, so we’ll favour the range holding, unless Australian or Chinese data really surprises.

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