12th April 2017 – Weekly Currency Market Report



The Market in Brief:

                                                                • AUD down against the majors.
                                                                • AUD Retail  Sales -0.1% V expected +0.3% whilst Trade Balance +3.57bn V expected +1.75bn and RBA leaves cash rate at 1.5% as expected.
                                                                • USD NFP +98,000 V expected +174,000. Unemployment Rate drops from 4.7% to 4.5%
                                                                • GBP data mixed

Market Events Due:

                                                            • GBP CPI y/y (Tue) Average Earnings Index 3m/y (Wed)
                                                            • AUD Employment Change (expected + 20,300 jobs) and Unemployment Rate (expected 5.9%) (Thur)
                                                            • USD PPI m/m (Thur) Prelim UoM Consumer Sentiment  CPI m/m Retail Sales m/m
                                                            • CNY Trade Balance (Thur)

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AUD/USD: AUD closed down for the third consecutive week against the USD. It posted a fresh 3 month low yesterday, giving exporters or those looking to buy AUD their best opportunity since mid January. It’s now down 3.25% from the fresh 4 month high it posted 3 weeks ago. Retail Sales printed below expectations and whilst we had another phenomenal Trade Balance  at 3.57 bn for the month, AUD continued to fall. To top it off, whilst U.S. NFP came in well below expectations, unemployment in the U.S. fell from 4.7% to 4.5%. AUD briefly broke down through short term support but managed to recover. It is at quite an important support level that held this time last month and further back through January, December and November where it provided strong resistance before AUD broke to the upside. Importers with limited time can target 30 and 60 points above while exporters have a great opportunity to chip away.

AUD/EUR: Finished the week down just over 1%, holding the short term support which has held for 4 of the last 5 weeks. Over the last 5 weeks AUDEUR has been in a reasonably tight range of just 3%. This support level acted as resistance back through most of October and November before it broke to the upside and so is proving a reasonably tough level of support to break. 

AUD/GBP: Similar to the USD, AUD closed down for the third consecutive week against the GBP to post a fresh 9 week low. This represents a great opportunity for exporters or those looking to sell GBP. It was close to these support levels a couple of weeks ago and then it had a solid rally after some negative post Brexit news. On the charts this level has held for the last 4 days but pressure is mounting for a break lower. Long live the Queen as we used to sing at school which seems like a lifetime ago now that I am 50. 

AUD/NZD: Closed the week down to post a fresh 5 week low after reaching our target of 1.1000 3 weeks ago for a nanosecond. There is short term support about 30 points below so exporters or those looking t buy AUD can target that level. Importers with time on their side can target that 11 month high 3 weeks ago which is 200 points away.

AUD/JPY: AUD closed the week down against the JPY to post a fresh 5 month low giving exporters a great opportunity. AUD seems to fall harder against the JPY than even the USD. Gains over the last 4 months have been erased in the last 3 weeks. Only 2 months ago AUDJPY was at a fresh 12 month high. Short term support has broken so AUD looks like a busted at the moment. If your cab driver or pizza delivery guy starts talking about selling AUDJPY then it’s time to buy.

AUD/CHF: Closed the week down and has now been trending down since for the last 6 weeks after hitting a fresh 22 month high. There is short term support here but as suggested a couple of weeks ago importers may need to move their targets lower.

Compass Global Markets Team.



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