19th December 2016 – Weekly Currency Market Report.



The Market in Brief:

                                              • AUD down against the majors but up against JPY and NZD.
                                              • AUD posts fresh 12 month high against JPY
                                              • USD Fed raises interest rates to 0.75% as expected
                                              • U.S. data mixed

                                              AUD jobs print 39k  V expected 17K with the unemployment rate up from 5.6% to 5.7%

Market Events Due:

                                          • EUR German Ifo Business Climate (Mon)
                                          • AUD Mid Year Economic and Fiscal Outlook (Mon) Monetary Policy Meeting Minutes (Tue)
                                          • JPY BOJ Policy Rate and Monetary Policy Statement
                                          • USD Core Durable Good Orders m/m Final GDP q/q (Fri)

                                          GBP Current Account (Fri)

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AUDUSD: After hitting a fresh 1 month high earlier in the week the AUD closed the week down almost 3%. The U.S. Federal Reserve raised interest rates for only the second time since the GFC to 0.75% which was widely expected. It was their suggestion they may raise rates 3 times next year that gave the USD an added boost. However this happened last December (2015) when they raised rates for the first time since the GFC and suggested there would be 3 rate rises in 2016. Ultimately we have just had the one in December. After the announcement last December AUD fell 3 cents over the next month into January then rallied 10 cents by late April. For importers resistance is 80 points above while exporters have their best opportunity since the Brexit 6 months ago.

AUDEUR: The AUD closed the week down just over 1% against the EUR. On Thursday it hit a fresh 5 week high and was only just shy of an 18 month high. This still represents a very good opportunity for importers. Exporters or those looking to buy AUD can aim for 2% lower as it was there only 7 trading days ago. 

AUDGBP: The AUD closed the week down 1.2% against the GBP. It has closed lower 5 out of the last 7 weeks and is very close the the fresh 10 week low it hit just 8 trading days ago. Over the last couple of months the majority of U.K. data has printed towards the upside. 

AUDNZD: The AUD closed the week up 0.75% against the NZD. It has spent the last 6 weeks within a 3% range. It did hit a fresh 5 week low on Wednesday before rallying 120 points over the next couple of days. The ranges are still favouring the exporters and those looking to buy AUD as we are only 250 points above the 17 month low in mid September. Importers can target 200 points higher where the strong levels of resistance have held since June.

AUDJPY: The AUD posted its sixth consecutive weekly gain against the JPY hitting a fresh 12 month high on Thursday. The last time it was up there was the 4th January 2016, the first trading day of the year. It closed the week up only 0.4% as it fell 1.6% on Friday. This still represents a great opportunity for importers given the AUD is still up over 12% after the fall on Friday from its lows after Donald Trump’s victory 5 weeks ago. It broke through the previous resistance and hit the big line in the sand before retreating.

AUDCHF: AUD closed the week down around 1% against the CHF. It posted its high for the week last Monday which was a 5 week high and only 40 points below the 18 month high posted at the end of October. Importers can target those levels 140 points higher. On the charts the lows in AUDCHF since February this year continue to slowly grind higher.

Compass Global Markets Team.



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