22nd October – Daily Currency Market Report

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The Market in Brief:

  • AUD breaks lower
  • NZD sold again
  • Chinese equities fall 3%
  • Bk of Canada hold rates at 0.50%
  • BoE’s Carney discusses “Brexit”
  • Gold $1,166 & DJIA 17,150

Market Events Due:

  • NAB Quarterly Business Confidence
  • Spanish Unemployment
  • UK Retail Sales
  • ECB Meet
  • US Weekly Unemployment Claims

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AUDUSD: The Australian Dollar was sold off the highs as Chinese equities had another sizeable drop and as the markets start to weigh up the increasing prospect of the US Federal Reserve hiking interest rates at next week’s meeting. There are no major data releases due for the rest of the week; so looking at the charts we see the flag formation has finally broken to the downside and hit support of the 50% retracement of the 4 month range. We’d suggest these levels hold as we head towards the weekend.

AUDEUR: This pair fell as the Euro was kept on the sidelines ahead of this evening’s important ECB meet. The market is increasingly hopeful of some definitive comments on the huge QE program and whether it will be added to as a way of stimulating the faltering economy and negative inflation. Should this happen then we’d expect a sizeable correction higher and a push through technical trend line resistance that has capped since late April and a target, in due course, 250 points above.

AUDGBP: Governor Carney spoke more on the pro’s and con’s of staying in Europe than about interest rates, however the sizeable investment in the UK by China has supported the Pound and seen this pair pull back further from last week’s highs. UK Retail Sales data is due this evening and expected to show signs of a pickup and give more support to the downward trend.

AUDNZD: Yesterdays forecast 50 points of upside was hit, but the cross soon pulled back as negative Chinese equity mores impacted on the Aussie the most. However with a long weekend in NZ coming up and a big week of data then due, we cannot see a reason for a return to lower levels yet. Our short term target is now 150 points above and a more “neutral” area for this pair to be.  

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Jim Devonport

Corporate & HNW Client Manager 

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