16th June – Daily Currency Market Report.

The market in brief:

·         AUD up again

·         NZD flat

·         Greek talks break down

·         EU Trade Balance up

·         US Manufacturing down

·         US Industrial Production down

·         Gold at $1,186 & DJIA 17,800

Market moving events due:

·         RBA minutes

·         UK Inflation

·         German Economic Sentiment

·         US Building Permits

·         NZ Dairy Trade Price

AUDUSD: Started the week on the front foot, completely ignoring RBA Assistant Governor Kent’s speech and the uncertainty in Europe but instead on the weaker than expected US data. Thoughts are that as the US numbers have been soft recently, we won’t see calls for an immediate rate hike at Thursdays US Federal Reserve meeting. In the meantime this morning sees the release of the latest minutes from the RBA’s meet and we’ll look for any more threats of a last interest rate cut. Technically we see previous lows holding however and favour a push back to the 50% retracement of the selloff seen since mid-May that sits 120 points above. 

AUDEUR: With the breakdown in Greek debt talks at seemingly all angles, this pair gapped higher at the open. However the market was unwilling to take it too far and we retraced, only for a huge rally to be sparked again as European traders came to their desks. We touched 2 week highs and with reports that state the market is positioned for a Grexit the prospects for the Euro are not great. German ZEW data is due this evening and is normally important and although may cause a ripple, it is what the Greeks do / don’t do that will be key. Technically we are bang in the middle of this year’s range, so fair value for importers and exporters, but leaving plenty of room for a sizeable shift with any decisive outcome. Be prepared to take advantage with market orders.

AUDGBP: News that UK house prices jumped 3% over the month meant this pair made fresh 5 ½ year highs before being pulled back into the range again, ahead of a very important next 24 hours. UK inflation is due this evening and the market is eager to see whether it can pull back from “deflation” that has been hit for the first time since 1960. Any positive number will be welcome and with the RBA minutes expected to be dovish again, we could well see this pair push lower still. We’ll reiterate our thoughts that a sizeable uptrend could well be upon us.

AUDNZD: The Tasman cross hit highs not seen since mid-November as the market continues to favour another interest rate to come from the RBNZ in July. Our month long target is just NZD 1 cent away now and appears set to be hit. We may still have the odd dip that AUD buyers can take advantage of but the trend remains firmly up. Should sentiment remain then we’ll look for 1.20 / 0.8335 levels further out.

Quote of the day: “Cause we all have wings, but some of us don’t know why” Andrew Farriss

Alternative Currency Hedging: Ask us about a great alternative to traditional forward contracts that give the ability to cover at attractive levels, but with the flexibility to walk away if the rate improves or if not required.

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