The market in brief:
- AUD pushes higher
- NZD closes flat
- French and German Manufacturing disappoints
- UK Retail Sales fall sharply
- Greece set to be given a 4 month reprieve
Market moving events for the next 24 hours:
- Chinese public holiday
- Bank of Japan Monetary Policy Meeting minutes
- German Ifo Business Climate
- UK CBI Realised Sales
AUD-USD: The Australian Dollar was pulled higher as risk appetite returned with confirmation that the EU has agreed to a 4 month extension to the bailout repayment schedule, as long as the Greek government can submit a proposal on reforms. That and a growing ceasefire in Ukraine helped take the Aussie up to our forecast resistance area, however the market was unwilling to take it further given the weekend and current Chinese New Year celebrations. The week ahead should start slowly, until we get news from Europe this evening and also as we look towards important data due on Wednesday. On the charts a break of these highs should target the psychological USD 0.80 cents level and a sensible place to hedge short to medium term future currency exposure.
AUD-EUR: The Euro lost further ground in Friday’s Asian session, before pulling back to close with just a small loss on the day with the announcement of a possible 4 month extension. The Greek Government does still have its work cut out to come up with a credible plan on how they are to finance the Euro 323 billion it owes, however the market is pleased that at least both sides are talking. As a side note, French and German manufacturing data was poor, but that was largely over looked and todays German Ifo Business Climate Survey will most probably also just be given a cursory glance. On the charts we are heading towards the top of the upward channel, so further gains may only be small and we note the downside potential is fairly large. Importers may want to book here, especially considering we’ve gained Euro 2 cents over the course of February.
AUD-GBP: The Pound sank here as funds were transferred back into Europe and as UK Retail Sales figures were the worse in several months. The Confederation of British Industry Realised Sales data is set to come this evening and could also have a sizeable effect on price action, along with any news from the mainland of course. On the charts we are now at resistance that has capped for the last fortnight and was support for the previous 2 weeks before that. With no major domestic data and none from the UK until Thursdays GDP number, we may struggle to get much in the way of further upside until then.
AUD-JPY: : As forecast in Fridays report the Australian Dollar strengthened here as risk appetite meant funds flowed back out of the safe haven Yen and into the higher yielding Aussie. We sit bang on the 50% retracement of the range traded so far this year and should tread water here for the next couple of days at least.
AUD-NZD: We were a tad conservative with our thoughts on price action on Friday, going for a 30/40 point gain on the day when in fact the Tasman Cross pushed up twice that. Large scale AUD buying from NZ corporates we hear was the main reasoning behind the move and we’d favour that continuing until Thursdays NZ Trade balance data is released. Our target sits 120 points above this morning’s opening level.
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