12th May – Daily Currency Market Report.

The market in brief: 

  • AUD drifts off its highs
  • NZD under pressure
  • Australian Business Confidence stable
  • Eurogroup meetings start
  • Bk of England keeps policy unchanged
  • Gold at $1,188 & Brent Crude at $65.4

Market moving events due:

  • Australian Home Loans
  • UK Manufacturing
  • Australian Budget
  • EU Ecofin meets start
  • UK GDP
AUDUSD: The Australian Dollar has been pulled lower, despite a surprise interest rate cut from China and as the domestic Business Confidence data threw up no surprises. The market is simply happy to keep the currency around current levels and remains largely neutral to any medium term direction as we await the budget this evening and major data down the track. On the charts we need a break of last week’s highs that sits 150 points above, for further upside whilst support sits just 50 points below. So there be your targets for the week.   

 AUDEUR: The Eurogroup meetings started again with Greece on the back foot and the troika demanding reform. News reports suggest that Greece started to pay back Euro 750 million of interest on its debt, however the Greek Fin Min said they were two weeks away from a crises. Whilst this is being played out all other economic data is set to be largely ignored, so we’ll continue to focus on the discussions. Technically we have closed the day flat so yesterday’s targets remain: “…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 resounding election victory is still giving the Pound support and that was added to as the Bank of England once again held interest rates and its overall monetary policy as is. Manufacturing data is due this evening and expected to show a small retracement so we may well see the Pounds gains start to slow as well. Overnight however it was all one way traffic as this pair fell down to lows last seen in mid-March. Our target now sits at psychological lows 65 points below and that held in mid-February. Resistance sits back at pre-election highs.  

AUDNZD: The Tasman Cross is NZD 1.5 cents higher over the course of just this one session. One major Australian banking group forecast an interest rate cut to come from the RBNZ in both June and July, whilst a large Dutch bank called the low on the RBA interest rates and said the next move is up. There is no NZ data today, so we’ll most probably remain up at these highs, but the RBNZ Financial Stability Report and a speech by the Chairman tomorrow will be key as will Thursdays Retail Sales. Our forecast low now appears to have rung true and we look to target the highs of Q3’14 that are NZD 5 cents above. AUD buyers target shallow dips. 

 

 


 

Quote of the day: A budget tells us what we can’t afford, but it doesn’t keep us from buying it. William Feather.

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