2nd December – Daily Currency Market Report

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The Market in Brief:

                          • AUD pushes on
                          • RBA keep rates on hold
                          • Chinese Manufacturing disappoints
                          • UK Manufacturing disappoints
                          • NZ Dairy Prices recover
                          • EU Unemployment at 10.7%
                          • Gold $1,068 & DJIA 17,840

Market Events Due:

                      • RBA Governor Stevens speaks
                      • UK Construction
                      • EU Inflation
                      • US ADP NFP
                      • FOMC Chairwoman Yellen speaks

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AUD/USD: Pushed higher still as the RBA kept interest rates on hold and although they have kept the door open for an interest rate cut down the track, they did release a more hawkish statement than was expected. The move ignored weaker Chinese Manufacturing and we now turn to speeches to be given by the respective central bank heads over the next 24 hours. Technically the trend should continue with our target now set just 50 points away.

AUD/NZD: Has traded flat as both centres released positive data, with NZ dairy price’s rebounding after 3 consecutive falls. There is no more NZ data due this week, so direction will come from this side of the Tasman and should see these levels held for a push higher. We target August highs, 4 cents above.

AUD/GBP: Has had a second day of sizeable gains as the market readjusts their recent optimism over the UK economy. UK Manufacturing disappointed and we have now fully priced out the expected interest rate hike. Construction numbers are due this evening and also expected to be weaker than last month, therefore suggesting this run higher may still more in it.

AUD/EUR: The Aussie Dollar’s strength outweighed a 4 year low in European unemployment as the market prepares for tomorrows ECB meeting. The market is expecting a flood of money to be pumped into the system, so there is room for disappointment and the chance of a sizeable correction lower. Whatever the outcome there is bound to be volatility and a spike in both directions as the news is digested. We suggest placing orders but do target a 2c move higher still.   

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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