20th May – Daily Currency Market Report.

The market in brief: 

  • AUD drops
  • NZD loses early gains
  • RBA to cut again if needed
  • NZ Inflation expectations up
  • UK deflation
  • German Economic Survey lower
  • US Building Permits up
  • NZ Dairy Price drops
  • Gold at $1,207 & Brent Crude at $64.45

Market moving events due:

  • RBA Dep Gov Lowe speaks
  • Japanese GDP
  • Australian Consumer Sentiment
  • Votes from BoE meet
  • US Fed minutes
AUDUSD: Fell sharply yesterday as the RBA minutes suggested there was room for interest rates to be cut again, should the economic situation require. The move was compounded by reports that US Building Permits are at a 6 year high and Housing Starts hit a 7 year high. Focus today is on RBA Dep Gov Lowe’s speech and minutes from the US FOMC meeting at which we’ll be looking for timing to the first interest rate hike. We therefore do not expect too much of a recovery in the next 24 hours, giving plenty of time for exporters. The move lower has been so strong, it may have broken the uptrend but we’ll only be able to confirm tomorrow.

AUDEUR: This pair moved higher again as the economic sentiment in Germany is weaker and as time starts to run out for any plausible solution to the Greek debt issues. Greek Fin Min Varoufakis has suggested there should be a deal in the next week, but they are fast running out of road in which to kick the can along. On the charts we bounced off the 50% retracement of the recent sell off but should push through and back to the top of the range.

AUDGBP: This pair has closed flat but sprung into life, as forecast yesterday, upon release of the UK inflation numbers that showed the UK has hit a patch of deflation for the first time since the 1960’s. The result pushed this pair up to 1 week highs, but the move was soon taken advantage of by importers overnight orders. Votes from the last Bank of England interest rate meeting are announced tonight, but we see no change of the 9-0 unanimous decision. On the charts we feel the upside is favoured, as suggested overnight, although it may take a few days to get into firmer directional price action.

AUDNZD: The Tasman Cross traded twice its normal daily range yesterday as the RBNZ Inflation Expectations report beat most analyst’s forecasts. The pair hit both sides of the range that has held over the last 10 days, but hold it did and we open just off the lows. There is no major economic data from NZ for the rest of the week; however the NZ Budget tomorrow will be of interest. On the charts we see an upward break early next week.

 


 

Quote of the day: The first wealth is health. Ralph Waldo Emerson

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