The Market in Brief:
Market Events Due:
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AUDEUR: Finished the week flat but has since fallen. The solid levels of resistance have held 4 times since November last year. However the dire situation in Europe has not changed and EUR rallies have been getting progressively lower since August last year.
AUDGBP: After 2 consecutive weekly losses against the GBP the AUD managed to post a small gain of 1.25%. UK GDP printed above expectations but the currency failed to rally. Expectations are for a cut in the AUD cash rate to an historical low of 1.5% and a cut in the UK cash rate for the first time since the GFC from 0.5% in March 2009 to 0.25%. The Bank of England is expected to cut interest rates for the first time since the financial crisis this week and lower its UK growth forecasts by the biggest margin on record, in response to the uncertainty caused by the EU referendum result.The Bank’s monetary policy committee will announce a decision on Thursday, when the latest inflation report and growth forecasts will be published. The MPC held off reducing official borrowing costs from their record low in the immediate aftermath of the Brexit vote on 23 June. However, the committee has dropped heavy hints that it will act this week when fresh forecasts for the economy are published. Mark Carney, the Bank’s governor, warned before the referendum that voting to leave could push Britain into a recession.
AUDNZD: AUD finished the week 1.5% lower against the NZD, falling to short term support on the charts. It is still 1.5% higher than the fresh 16 month low posted 4 weeks ago representing a good opportunity for those looking to convert NZD to AUD.
AUDJPY: The AUD closed down around 2% lower against the JPY after stimulus measures announced by Prime Minister Abi came in below expectations. This led to the JPY being the best performing major currency of the week.
AUDCHF: The AUD finished the week only 10 points down against the CHF but it has dropped almost another 1% overnight. The big line in the sand that has held for 16 months has remained intact.
Compass Global Markets Team.