20th October – Daily Currency Market Report

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The Market in Brief:

  • AUD tests the highs
  • NZD flat
  • Chinese GDP beats expectations
  • Chinese Industrial Production lower
  • Gold $1,169 & DJIA 17,211

Market Events Due:

  • RBA Monetary Policy Meeting minutes
  • BoE’s Gov Carney speaks
  • US Building Permits
  • NZ Global Dairy Trade Price

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AUDUSD: Better than expected Chinese GDP data pushed the Australian Dollar higher, however those levels were soon sold into and we closed the day flat. The Chinese print of 6.9% for Q3’15 was better than expected, but the slowest rate of growth since for 6 years and shy of the government’s 7% goal. We now look to this morning’s release of minutes from the recent RBA meet for signs of a more neutral tone from them. Further out we are starting to focus on next week’s FOMC meet, which should mean price action will become muted. On the charts our forecast resistance held, but may break should the RBA spring a surprise.  

AUDEUR: This pair also failed to hold onto near week long highs as sellers took advantage of attractive levels and as the market is unwilling to push away from this comfort zone ahead of Thursday ECB meet. We are looking for any signs of a change of tune from the ECB’s Draghi and possible increase to quantitative easing, following their downgrade of the economy last month. Those buying Euro’s may want to hold fire for a couple of days.

AUDGBP: The Pound strengthened for the 4th day out of 6 as the market takes advantage of the Pounds recent weakness and in reaction to MPC member Forbes comments that an interest rate hike could come sooner rather than later. Governor Carney speaks twice this week, but is not expected to mention interest rates until Thursday, which is when we also have UK Retail Sales figures. This pair may well hold around these levels until then as technically we are just shy of trend line support of the 6 week old upward channel.

AUDNZD: The Tasman Cross bounced upon the Chinese data releases, however soon reversed that move as NZD buyers jumped in. NZ dairy price data comes this evening and is on course for a 5th straight increase, following the 10 negative prints we had prior. Technically we trade at the 50% retracement of the 6 month range and the market is at a cross roads, however we feel the move is now exhausted and should recover.

QUOTE OF THE DAY: Success is how high you bounce when you hit bottom. George S. Patton

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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