The Market in Brief:
Market Events Due
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AUDUSD: GFC like conditions hit across all markets overnight as panic selling with thin volumes exaggerated moves. With no economic data to give guidance at all, equity markets dragged the local unit down just shy of 4% at one stage, (when a 1% range is the norm). Eyes will turn to the Chinese Central Bank this morning for any signs of support, but don’t hold your breath. Forecasting ahead in these conditions is pointless and simply a gamble. Technically the 6 week range has broken with a vengeance and businesses now have to decide where they see a bottom and react / don’t react accordingly. The sensible course of action is to have a worse-case scenario as a stop order and to take advantage of any favourable spikes.
AUDEUR: Untoward price action sent this pair lower still on risk aversion. The pair touched levels last seen in late 2009 and the 50% retracement of the rally we saw from 2008-2012. German Business Confidence numbers come this evening and may force a correction given they are expected to be weaker…but we’ll need a couple of days of calmer markets to suggest a direction from here.
AUDGBP: Our medium term target has been hit, albeit slightly faster than we anticipated. The Pound has strengthened as the market withdraws all funding from the outer reaches and repatriates into safe havens such as Gilts. There is no UK data due until Friday’s GDP, so until then the local “Asian” picture will determine further direction and we see no reason for the trend not to continue.
AUDNZD: The New York open sent this pair NZD 5 cents higher at one stage as the global investment houses bailed out of anything less liquid. NZ Inflation expectation data is due this morning and taking out the recent one uptick in dairy prices, we suggest the data will be weak and see this pair carry on its merry way.
QUOTE OF THE DAY: Fortune brings in some boats that are not steered. William Shakespeare
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Corporate & HNW Client Manager