2nd June – Daily Currency Market Report.

The market in brief:

  • AUD lower again
  • NZD flat
  • Australian Building Approvals drop
  • Chinese Manufacturing as expected
  • UK Manufacturing below forecast
  • EU Manufacturing up
  • US Manufacturing beats expectations
  • Gold at $1,189 & Brent Crude at $64.88


Market moving events due:

  • Australian Current Account
  • RBA meeting
  • UK Construction
  • NZ Dairy Trade Price 

AUDUSD: Starts the week on the back foot as a surprising and sizeable drop in domestic Building Approvals means that the Reserve Bank of Australia has another reason to suggest interest rates can still be cut further. The central bank meet this afternoon and although there is virtually no chance of a cut, they are expected to maintain the “soft easing” bias. The better than expected US data also contributed to the downside but there is no such danger of that happening again until tomorrow night. Focus then remains here and looking at the chart we are only 65 points above support levels that held so firm throughout March and April. The indicators are in over sold territory so we’ll suggest the lows hold firm again.

AUDEUR: Conflicting news reports of whether Greece will be able to honour its latest debt repayment that is due on Friday have had contributed to a push higher for this pair, despite local economic releases. Greece is struggling to repay 300 million this week, let alone the 1.6 billion that is due before the middle of the month. However positive Manufacturing data from all the major European centres and an uptick in German inflation pulled the pair lower again. We’ll remain in this pull me / push you range until a definitive answer is found to the Greek problem, but therefore giving plenty of opportunities for both importers and exporters. Placing market orders is the way to play this and expect a sizeable move to come.

AUDGBP: The troubles in Greece have overflowed into the Pound, that and the already very high levels, thereby contributing to a gradual corrective move higher. There was a small retracement towards the close but the weaker than expected UK Manufacturing number ensured this cross finished in positive territory. UK Construction data is due this evening and expected to show an improvement. We can therefore see a start to our view of a concerted move lower and a medium term target 600 points below.

AUDNZD: The NZ Queens Birthday holiday meant the NZ Dollar held flat and therefore seeing this pair closes down 75 points off its highs. Tonight’s release of the NZ Dairy Trade Price will be key, given Fonterra’s recent statement of an already flooded market. With the RBNZ not meeting until next Thursday, where they are widely expected to cut interest rates, we‘ll expect our sideways / up price action to continue but a sizeable correction higher then.

Quote of the day: Kindness is in our power, even when fondness is not. Samuel Johnson

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