22nd July – Daily Currency Market Report.

The market in brief:

  • AUD rallies
  • NZD pulled higher
  • Broad based USD weakness
  • RBA minutes “neutral”
  • Gold recovers huge losses
  • Apple shares fall 8%
  • Microsoft reports a loss
  • Gold at $1,100 & DJIA 17,882


Market moving events due:

  • Australian Inflation
  • RBA Gov speaks
  • Bk of England MPC votes
  • US Existing Home Loans
  • RBNZ (Thursday morning)

AUDUSD: The Australian Dollar was pushed lower as the Reserve Bank of Australia released minutes from their last meeting where they remained “neutral” as it awaits future economic data to decide if there is one more interest rate cut in the pipeline, whilst also calling for a weaker currency – of course. However the Asian session sell off was reversed with broad based US weakness as commodities made a solid recovery and as Greece made its first payment (see below). Another interesting day is ahead with domestic inflation numbers, which are expected to show a pick up there, followed with a speech by RBA Governor Stevens.  Should this recovery continue there is a potential 75 points of upside until we hit the firm psychological and technical resistance of 0.75 cents discussed yesterday.

AUDEUR: The Euro has gained on a weaker US Dollar and on news that Greece has successfully paid back the 7 billion bridging loan, with money that it had to borrow elsewhere. There are no data releases from Europe today, however the Greek Government will vote on a second package of austerity measures so we expect some push back there now that they have the bailout funds and these are more extreme tax increases being proposed. Looking to the charts and we have been held in a tight range whilst forming the right hand shoulder of a head and shoulders pattern. Should we break to the topside then that should see a sharper recovery to levels seen at the end of last month.

AUDGBP: The Pound suffered as the Euro strengthened and the Australian Dollar took full advantage, pushing this pair up to 1 week highs. There was no UK data released overnight to help support Sterling, so look to the Bank of England’s Monetary Policy Committee votes this evening but do not expect and dissenters from the current “rates on hold” mantra. Technically this correction higher is well within the longer term downward channel and this area has acted as a pivot point since 2008 and therefore suggests that we may not see much further upside at all.

AUDNZD: The Tasman Cross closes roughly flat, recovering from an Asian session shallow sell off as the market prepares itself for tomorrow mornings RBNZ meeting. There’s virtually no doubt that interest rates are to be cut, the question is by how much and whether the central bank communicates how much further the OCR is to come down. Be prepared for a shock and a ½% cut, by placing orders to sell AUD and buy NZD at the previous highs.

Quote of the day: The less routine the more life. Amos Bronson Alcott


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