26th October – Daily Currency Market Report

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The Market in Brief:

  • AUD ends Friday flat
  • NZD drops
  • China cuts rates again
  • French Manufacturing up
  • German Manufacturing down
  • Gold $1,164 & DJIA 17,630

Market Events Due:

  • NZ Bank Holiday
  • German Ifo Business Survey

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AUDUSD: The Australian Dollar rallied on news the PBoC had cut lending rates for the 6th time in less than a year, in a bid to stimulate growth. However as has been the markets want recently, any A$ strength was soon sold into and the pair closed the day flat. Australian inflation and of course Thursday mornings FOMC statement are the main focus for this week, so should ensure the range is held until then. We’d suggest orders are placed before hand so as to take advantage of the ensuing volatility.

AUDEUR: The ECB’s clear signal that it will look to add to the current QE levels has this pair holding at fresh 2 month highs. The German Ifo survey is the only major data release of the week and is expected to print lower than last month. Therefore we cannot see any reason for the common currency to suddenly claw back its recent losses and we see another 100 points of upside until target initial resistance levels.

AUDGBP: The Pound weakened here as a fall out from the Euro sell off and we touched resistance levels that have held over the last 2 weeks. Tuesday’s GDP figures are the only data release of note from the UK this week, so with the US FOMC looming we shouldn’t see the range broken. Technically the near term upward corrective channel is still in play so may give GBP buyers another opportunity before the major downward trend continues.

AUDNZD: The Chinese rate cut gave the Aussie a 140 point boost here and we closed bang on the middle of the week long range. Price action is indicative of a market split as to the respective central banks next move on interest rates and so we’ll likely hold these levels until Thursdays RBNZ.

QUOTE OF THE DAY: There’s no day that is the same as the day before. So you have to be energized; you have to be focused. Hillary Rodham Clinton (Born this day 1947)

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. 

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Jim Devonport

Corporate & HNW Client Manager 

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