11th May – Daily Currency Market Report.

The market in brief: 

  • AUD trades a volatile but flat session
  • NZD  makes a surprising gain
  • RBA statement gives no hint of rate cuts
  • Chinese Trade Balance just shy of forecast
  • US NFP just below expectations
  • US Unemployment Rate drops to 5.4%
  • Chinese Inflation ticks up to 1.5%
  • Gold at $1,188 & Brent Crude at $65.45

Market moving events due:

  • RBA Monetary Policy Statement
  • Chinese Trade Balance
  • US Non-Farm Payrolls
  • Chinese Inflation (Saturday) 

AUD-USD: Traded in more than a 100 point range on Friday as the market digests the apparent change of tune from the RBA and looks for medium term direction. There was no willingness to take the currency outside the recent range however, as we awaited the all-important US Non-Farm Payrolls. That number came out slightly below expectations and therefore showing no reason to believe the US should start to hike interest rates until Q3’15. There is not too much market moving data due this week, so the charts will play an even more important role. Technically then we remain firmly in the uptrend and looking to hit trend line resistance 75 points above.

AUD-EUR: A French bank holiday and ongoing talks over the Greek debt situation meant that a downturn in the German Trade Balance was the only economic data of note for us on Friday. The market therefor took the Aussie Dollar slightly higher, but kept the pair firmly in the range that has held since the start of the month. The absence of any other notable data, in what is a holiday shortened week, means the start of Eurogroup discussions this evening may well result in exaggerated reactions to rumours, press releases and policy maker communiques. On the charts we are 120 points shy of support for exporters and a fair way from highs of March. Perhaps importers should target the more realistic target of the 50% retracement of the 10 week old range that sits 50 points above.

AUDGBP:The rout in the election that saw the Conservatives recaliming power resulted in the explosive price action that we have been forecasting. The market had been positioning for a hung parliament and a period of political instability, however the polls were completely wrong and the result was emphatic. Sterling of course rallied, however interestingly was unable to hold on to the lows as the weekend beckoned and the pair retraced some of the earlier losses. This evening sees the Bank of England meet, but there should be no change from them. Instead we look to tomorrows Manufacturing data and a speech by the BoE Chairman on Wednesday. Technically we have blown out of both sides of the pennant formation and sit on the 50% retracement of the range that we have seen since mid-February. Therefore suggesting the volatility will remain whilst we search for longer term direction.

AUD-NZD: Actually back tracked on Friday, as the market took advantage of the recent rally and larger than normal AUD selling was recorded. NZ focus centres around the middle of the week with the RBNZ Financial Stability Report and a speech by their Chairman. Thursdays Retail Sales could also be key and as they are expected to show a slowdown and the charts also suggest higher levels to come. AUD buyers with NZD may get a reprieve on shallow dips to uptrend support 75 points below; however we target NZD 5 cents above.

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Quote of the day: The way to get things done is not to mind who gets the credit for doing them. Benjamin Jowett

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