28th October – Daily Currency Market Report

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The Market in Brief:

  • AUD breaks lower
  • NZD flat
  • NZ Trade Deficit widens
  • UK GDP lower
  • US Durable Goods down
  • US Consumer Confidence down
  • Gold $1,166 & DJIA 17,582

Market Events Due:

  • Australian Inflation
  • US FOMC meet (5am Syd)
  • RBNZ meet (7am Syd)

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AUDUSD: The Australian Dollar broke lower on weaker sentiment as reports suggest todays domestic inflation number could be the trigger for a Melbourne Cup day cut in interest rates. Technically our flag formation broke and triggered a larger sell off. With such a huge 24 hours ahead we’d suggest orders are placed before hand so as to take advantage of the ensuing volatility.

AUDEUR: The Euro traded sideways elsewhere, so this pair drifted lower as the Aussie suffered against the greenback. There is no major data due from mainland Europe for the rest of the week so direction will be driven locally and could therefore spark a pull back later this morning. Support sits 70 points below and a good target for exporters.

AUDGBP: Also ground lower as the local unit fell out of favour across the board. The move came despite UK Quarterly GDP contracting for a 3rd quarter and construction shrank the most since 2012. Looking to the charts and we are now just 60 points away from support of the near term upward corrective channel before a break and our longer term major downward trend continues.

AUDNZD: The NZ trade deficit widened again but still did nothing to halt another sell off in the Tasman Cross. The market has changed its mind on which central bank will be the next to pull the trigger with the RBA firm favorite’s for now. Therefore be prepared for the RBNZ meeting tomorrow morning as another cut by them should spark sizeable upside.

QUOTE OF THE DAY: You can observe a lot by watching. Yogi Bera

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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