16th October – Daily Currency Market Report

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The Market in Brief:

        • NZD stronger again
        • Strong US inflation data
        • Volatile 24 hrs for AUD

        Gold $1,182

Market Events Due:

      • Eurozone inflation
      • MPC member speaks

      US consumer sentiment

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AUD/USD: A volatile 24hrs for the AUD after local data revealed an unchanged 6.2% unemployment rate causing a small rally for the dollar, followed by US inflation data overnight which came out stronger than expected and erased all AUD gain. The weaker AUD was however short lived as Dovish comments from Fed member Dudley managed to push the AUD higher yet again and recoup earlier losses.

AUD/NZD: The NZD has been the top performing currency over the last month and is now at 4 month highs. The Feds apparent reluctance to hike rates in 2015 has been the catalyst for the recent strengthening although the stronger than expected inflation number this morning could delay a RBNZ rate cut and push the Kiwi to new highs.

AUD/GBP: Sterling fell overnight after stronger than expected US inflation numbers only to bounce straight back after the comments from Fed member Dudley. All eyes now turn to the pending comments from MPC member Weale and any further insights into BOE rate policy.

AUD/EUR: ECB comments overnight renewed market sentiment that the European bank will announce further QE in an attempt to stimulate growth in the region. Eurozone inflation and trade balance data out tonight will direct the next move for the common currency.

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 should the spot rate improve or the contract not be required. 

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Jim Devonport

Corporate & HNW Client Manager 

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