2nd February 2015 – Daily Currency Market Report.

The market in brief:

  • AUD held in a tight range ahead of the RBA
  • NZD trading along the recent lows
  • NZ Building Consents drop sharply
  • Australian Producer price Index falls
  • European inflation disappoints
  • US GDP weaker than expected
  • Chinese official Manufacturing contracts

Market moving events for the next 24 hours:

  • HSBC’s Chinese Manufacturing
  • Spanish Unemployment
  • UK Manufacturing
  • US Manufacturing

AUD-USD: The Australian Dollar has been held in a tight 70 point range as the market sits to wait and see if the Reserve bank of Australia will follow their Canadian and Danish counterparts in cutting interest rates. The market has obviously priced in at least 2 cuts, so any delay in a change to monetary policy or less dovish comments from Governor Stevens may well spark a rebound. We favour no cut, but some fairly dire comments. On the charts we see support 55 points below and resistance USD 1 cent above.

AUD-EUR: Despite domestic issues the Australian Dollar has pushed higher against the Euro as the market waits to see who will blink first out of Greece or Germany over the debt repayment issue and as Eurozone inflation fell again. Spanish unemployment data is the only piece of economic data due, however we will watch the news headlines for further developments and any push towards a “Grexit”. For those watching the Euro Swiss exchange rate, we hear that the Swiss national bank is unofficially holding a 1.05-1.10 “corridor” which is likely to give the Euro some support. We favour support to hold down here, until tomorrows RBA meet and possibly further out.

AUD-GBP: Month end flows out of Europe and into Sterling continued and have pushed this pair lower, in the absence of any meaningful UK data. UK Manufacturing is set to come this evening and expected to show continued growth so may push this pair lower still, however with the RBA tomorrow the move may be shallow.

AUD-JPY: Heavy Euro JPY selling has resulted in this pair continuing to fall lower and we open the week nearly 7 Yen lower than the highs that we saw in the middle of January. There is no important Japanese data set to come this week, so we focus on Australian and Chinese developments.

AUD-NZD: With both currencies suffering from central bank comments and expected action the Tasman Cross has been held in a range. This should all change tomorrow with the RBA meet, then on Wednesday with the release of the NZ Global Dairy Trade Price number and Unemployment figures. With an expected delay in interest rate cuts from the RBA, we see upside potential for this pair and the technical channel to hold, as it has done. Support is 30 points below and resistance NZD 2 cents above.

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