The Market in Brief:
Market Events Due:
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AUD/USD: The AUD rebounded 3% over the week to post a fresh 10 month high against the USD. It was boosted by the unemployment rate dropping to 5.7%. The support at 30 points below which had held twice was not tested and the resistance 70 points above was broken. It has been at this toppish level for around 3 weeks and we need to be aware it has rallied 13% in 13 weeks. After the OPEC nations met in Doha over the weekend and failed to reach an agreement to slow oil production the commodity currencies (AUD, NZD and CAD) opened lower.
AUD/EUR: The AUD had a huge 4% rally against the EUR last week as forecast and well done to those who converted EUR to AUD. The support 40 points below was not tested and the resistance 80 points above was broken. We are about 120 points shy of resistance that has held for 5 months. A very good opportunity for those looking to buy EUR. As stated in previous reports over the last couple of months we still believe the EUR should be weaker given they are in negative interest rates and the risk is to go deeper into unchartered waters. Denmark, Belgium and now Netherlands are into negative interest rates.
AUD/GBP: The AUD rebounded against the GBP to post a fresh 17 month high. This is a big line in the sand as the correction has been exacerbated by the speculation over a Brexit. The GBP has corrected against the majors and whilst the market is concerned about the negatives for a Brexit we need to be aware of the possibility they do not exit and also they will not be weighed down by the cost of the refugee crisis that applies to members of the EU.
AUD/NZD: The AUD closed the week slightly higher against the NZD. We are still 150 points shy of the long term resistance that has held for 20 months. A good opportunity for importers to cover if we get a rally to this level. This may be a little harder to achieve as NZ Q1 inflation was slightly higher than expected so the probability of further NZ rate cuts remain low.
AUD/JPY: The AUD managed to claw back about 2/3 of its big drop against the JPY last week. Resistance is still a hefty 200 points away with support about 50 points below. The JPY is still outperforming the other majors currencies so the AUD is holding quite well.
AUD/CHF: The AUD had a huge rally against the CHF, similar to that of the EUR which really bucked the weekly lower trend that had been in place for 4 weeks. It is 100 points shy of resistance that has held for the last 12 months.
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Compass Global Markets Team.