The market in brief:
- AUD down 2.2%
- NZD down 65 points
- Australian Services up
- Australian Retail Sales below expectations
- Chinese (HSBC) Services down
- Spanish Services down
- UK Services up
- Gold at $1,168 & DJIA 17,701
Market moving events due:
- Greek Bailout Vote
- Australian Inflation Expectations
- Australian Job Advertisements
AUDUSD: A very thin, nervous and holiday effected session on Friday had the Australian Dollar touching a fresh 6 year low. Local economic data was on the whole fairly healthy, although the pickup in Retail Sales came below expectations. The Greek referendum and US Independence Day holiday however ensured the market stayed away or moved into safer investments. This morning’s open has the local currency 2.2% lower than Fridays open on the Greek referendum news, (see below). Market conditions should continue to be fairly volatile over the course of the next week as we have the RBA meet and FOMC minutes along with a plethora of major economic data to come. Technically the next downside target sits USD 2 cents below, where as any upside momentum will need to reclaim Fridays close.
AUDEUR: The Euro strengthened on Friday and this pair hit 4 month lows as the market seemed to favour a Greek exit. The referendum appears to have gone as expected seeing a resounding “No” from the Greek voters to any further bailouts and austerity measures. The actual decision on whether the country is in or out of Europe may take some time to clarify as the Greek Government and the Troika will now sit down to discuss if there is any future. There is no major economic data to come from the EU this week, so expect the Greek events to hold sway. On the charts we have opened lower on the political uncertainty but within the broader range that continues to hold and we’d suggest importers and exporters abide with that whilst they can.
AUDGBP: The Services sector in the UK picked up again, now in a continuous growth mode since February 2013 and the Pound has also beneficiated from the influx of funds that are coming out of mainland Europe. The week ahead has several major events due with Manufacturing, the Budget release and the Bank of England meeting amongst others. On the charts we open at 6 year lows and well within the medium term downward channel that targets 0.4545 / 2.20 perhaps as early as the middle part of next month.
AUDNZD: The Tasman Cross is now NZD 2 cents lower than its mid-week highs as the more liquid Australian Dollar suffers at the hands of the safe haven speculators. NZIER Business Confidence data is due tomorrow and the only major event on the NZ calendar. Interestingly the local NZ newspapers are increasingly reporting on the potential for a recession unless the RBNZ can completely reverse all of the rate hikes from last year by easing monetary policy 3 times over the next 3 or 4 meetings. On the charts we have corrected lower to levels seen in the latter part of last month and suggest that AUD buyers with NZD receipts look at these levels for upcoming exposure. Our favoured move is still higher with a target NZD 7 cents away and likely to be hit Q3’15.
Quote of the day: The beginning is the most important part of the work. Plato