The market in brief:
- AUD rejects the highs
- NZD also suffers on USD strength
- Australian Import Prices drop
- Mixed secondary EU data
- US Weekly Unemployment Claims fall
- Chicago PMI firmly back into growth mode
- Gold down to $1185 & Brent Crude at $66.75
Market moving events due:
- Australian Manufacturing Index
- Chinese Bank Holiday
- Chinese Manufacturing
- Australian Producer Price Index
- European Bank Holiday
- US Manufacturing
AUD-USD: Gave up 150 points yesterday as the market reassess the chance of an interest rate hike from the US Federal Reserve in Q3’15 and a cut from the RBA on Tuesday. A drop in Import prices, fall in the price of gold and US Weekly Unemployment Claims at 15 year lows also helped spur the selloff. Domestic PPI and US Manufacturing data are our main focus today, although not expected to overly push the currencies around too much as we head towards the weekend. On the charts we have bounced off trend line support that holds from mid-month lows and should continue to do so. Exporters have their chance, but these are still relatively great levels for importers.
AUD-EUR: The Euro continued strengthening across the board as EU secondary data gave no negative surprises and the market waits for positive comments out of the Greek debt talks. A Labour Day bank holiday across mainland Europe will ensure thin volumes today but the possibility of exaggerated price action on any fresh news. On the charts our much vaunted 2 year highs held firm as suggested and the pair continue to lows seen at the start of the month. We have hit trend line support so should hold around here and perhaps grind slightly higher for our session.
AUD-GBP:The repositioning in the Australian Dollar ensured this pair tested lows again. There was no UK data so instead the market looked to the Aussie and US Dollar for direction. The UK election is still headed for a dead heat with the possibility that a new Government may take time to get together, (Belgium took 18 months to get theirs in place), and with a UK Bank holiday on Monday we can see the market happy to keep the Pound where it is for the next couple of days. Technically we have adhered to the pennant formation perfectly, even at this mature stage. It should therefore continue to hold and we see a steady move higher in the short term. We are set for an explosive move early next week, so those not wanting to gamble should look at buying or selling their Pounds now. Otherwise leave it a week and take your chance.
AUD-NZD: US Dollar strength was felt the more in the Australian Dollar and a not unexpected correction lower ensued. Although the RBNZ have put interest rate cuts on the table, NZ data hasn’t been too bad but we still feel the economic cycles of both countries are starting to shift, meaning a gradual correction higher for this pair. Our forecast target was hit but now with this correction we can gain momentum for a run up at the 50% retracement of the 6 month long sell off that sits 250 points above. Support levels, especially should the RBA go on Tuesday, is 150 points below.
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