27th April 2015 – Daily Currency Market Report.

The market in brief:

  • AUD starts the week at month long highs
  • NZD closes Friday flat
  • German Ifo Business Survey up
  • US Durable Goods fall sharply
  • EU meetings
  • S&P 500 and NASDAQ at all-time highs
  • Gold down at $1179.50 & Brent Crude at $65

Market moving events due:

  • NZ Public Holiday
  • UK CBI Industrial Orders

AUD-USD: The Australian Dollar ended the week on a high as global equity markets rallied and as weaker than expected US data gave the local currency a boost. We start this week focusing on two main points; namely RBA Governor Stevens’ speech tomorrow morning and the US Federal Reserve’s interest rate meeting on Thursday morning. Our governors dovish comments on the currency are a given, but of more interest is what he says about interest rates. On that note the US Fed are not expected to hike yet, but we’ll look to see if they confirm our thoughts that there will be no movement until Q3’15. On the charts there’s 120 points of potential upside and our favoured direction, with initial support 80 points below being the 50% retracement of the 3 month range.   

AUD-EUR:This pair finished the day flat and held firmly in the medium term range, which is understandable given the high level talks going on over in Europe. There have been conflicting reports but one was that the Greek Fin Min was called “a time-waster, a gambler and an amateur”.  It is not a pretty picture and something must be done soon as the money for Greece runs out in June. The week ahead will be short as mainland Europe celebrate Labour Day on Friday, but before that we have inflation numbers that are expected to see a slight improvement. With official comments expected to be supportive as well and such strong technical resistance holding firm, we suggest importers look at least some short dated future hedging. Exporters take advantage of temporary dips that will come. 

AUD-GBP:The Pound strengthened here, benefiting from the mixed signals coming out of the EU. However the move was only a reversal of the previous session, as has been the case for a while now. CBI numbers are due this evening, GDP tomorrow and Manufacturing on Friday. However with an election due next week, (and the RBA meet), the suggestion of a hung parliament should keep this pair held in the range. The technicals confirm this as our daily charts show the longer dated pennant formation holds, with support and resistance sitting 50 points either way.

AUD-NZD: The Tasman Cross is a healthy 50 points higher for those buying Kiwi Dollars as RBNZ Asst Governor McDermott’s words continue to spook the market and as we head towards the RBNZ meet on Thursday. There is a bank holiday in NZ today so expect a quiet start to the week, but with the central bank meet aside NZ does release GDP and Business Confidence so we should see some volatility over the next few days. However we’ll stick to the view that a bottom has been formed and we’re headed for higher ground with an initial target NZD 2 cents above.

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Quote of the day: “Earlier on today, apparently, a woman rung the BBC and said she heard there was a hurricane on the way… well, if you’re watching, don’t worry, there isn’t!” Michael Fish (Born this day 1944)

 

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 if the rate improves or if not required.

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