3rd June – Daily Currency Market Report.

The market in brief:

  • AUD sharply higher
  • NZD pulled with it
  • Australian Trade Balance shrinks
  • RBA less dovish than expected
  • NZ Dairy Price falls again
  • UK Construction up
  • Suggestions of a Greek debt deal
  • Gold at $1,193 & Brent Crude at $65.49

Market moving events due:

  • Australian GDP
  • UK Services data
  • European Central Bank rate
  • US ADP figures
  • US Trade Balance
  • US Non-Manufacturing

AUDUSD: A slight improvement to the Australian Trade Balance figures were a precursor to the RBA meeting. The central bank kept interest rates on hold, as widely expected, however their statement was decidedly less pessimistic than many had thought was to come. Comments such as “policy appropriate for time being” and “inflation consistent with target” outweighed “economy growing below long term average” and his usual statement that “a lower Australian Dollar is needed”. Today’s domestic GDP data is now our focus along with US Trade Balance numbers from the US. On the charts we open 170 points higher and seemingly headed to our target 50% retracement of the recent sell off which sits 130 points above.

AUDEUR: Some confirmed reports of a breakthrough in negotiations and that a formal offer is to be presented to Greece by the end of the week had the Euro strengthening. A pickup in EU inflation for the first time in 6 months also contributed to the Euro’s move and with both currencies rallying against the US Dollar we have closed flat on a day of some sizeable volatility. The European Central Bank meet this evening and it will be interesting to hear their comments on life, the universe and everything. Price action continues to offer 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: Despite a pick-up in in UK Construction, the Pound suffered at the hands of a stronger Euro as investment funds raced back into what appears to be an impending resolution to the Greek debt crises. The ever important UK Services sector reports this evening and is expected to show continued growth. That could well slow down the losses incurred for this pair overnight. Technically we are close to trend line support that comes in the series of lower highs seen since September and expect that to hold for a return to the downward move and our ultimate target 600 points below.

AUDNZD: With NZ market makers back at their desks the Tasman Cross returned to its normal volatile self and with the Australian developments listed above the pair pushed higher. News that the NZ Dairy Trade Price has dropped again added to the negative Kiwi sentiment. There is no further NZ data due until next Thursdays RBNZ meet where they are widely expected to cut interest rates. So we‘ll expect our sideways / up price action to continue but a sizeable correction higher then.

Quote of the day: Fortitude is the guard and support of the other virtues. John Locke

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