26th April 2016 – Weekly Currency Market Report.

CompassLandscape1

 

The Market in Brief:

              • AUD up against the majors with the exception of CAD.
              • AUD posts fresh 10 mth high against USD, 17 mth high against GBP, 6 week high against EUR and 1 year high against CHF.
              • U.S Dollar Index steady at 95 where there is support that has held for 15 months
              • Oil up to $44 after breaking 1 month resistance at $42
              • Gold. Resistance holds at USD 1,260

Market Events Due:

            • USD CB Confidence (Tuesday)
            • AUD CPI q/q (Wednesday)
            • USD FOMC Statement and Fed Funds Rate(Thursday)
            • NZD Official Cash Rate and RBNZ Statement (Thursday) 
            • JPY Monetary Policy Statement and BOJ Outlook Report (Thursday)
            • USD Unemployment Claims (Thursday)
            • CHF SNB Chairman Jordan speaks (Friday)
            • CAD GDP (Friday)


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AUDUSD: The AUD posted a fresh 10 month high last Thursday but has since corrected 1.75% to short term support. The AUD has rallied just shy of 15% against the USD in the last 3 months. Although it hit a fresh high the gains in April are smaller than those in February and March which suggests it is running out of steam in the short term. It is still a very good opportunity for importers with resistance 100 points above. If the short term support here breaks exporters may get a chance at converting another 100 points  lower. 

AUDEUR: After another solid rally to post a 6 week high against the EUR, the AUD ran into solid resistance that has held for the last 5 months and is off about 1.5%. Still a good opportunity for importers and keep in mind the last 2 times AUD was up here it fell 13% and 6 % respectively. Support sits at 60 points below and we still favour the upside given the negative interest rate scenario and migrant crisis that are still gathering pace in Europe.

AUDGBP: The AUD posted a fresh 17 month high against the GBP last Thursday but has since corrected almost 3%. As forecast last week this was a big line in the sand and whilst it was broken briefly the AUD has had a solid correction lower. Support sits 40 points below.

AUDNZD: The AUD posted a good gain against the NZD last week and was only 30 points shy long term resistance that has held for 20 months. While it has corrected 50 points since then importers who missed out last week may get another opportunity this week.

AUDJPY: The AUD staged a huge 5% rally against the JPY last week to hit its high on Friday. Resistance has held at these levels for the 4 months of this year so it represents a good opportunity for importers. The JPY was the worst performing currency last week.

AUDCHF: The AUD posted another solid rally against the CHF to post a fresh 1 year high. The last 3 times we have been up here we have seen solid corrections. A weak EUR is also weighing on the CHF.

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.

Compass Global Markets Team.

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