6th June 2016 – Weekly Currency Market Report.

CompassLandscape1

 

The Market in Brief:

      • AUD up against USD, GBP, CAD and CHF
      • AUD down against JPY and NZD and flat V EUR
      • AUD data all positive
      • USD NFP woeful @ 38,000 but unemployment down to 4.7%
      • CAD GDP and Trade Balance below expectations
      • GBP data close to expected

Market Events Due:

      • USD Fed Chair Janet Yellen speaks (Tue) Prelim UoM Consumer Sentiment (Sat) 
      • AUD Cash Rate and RBA Statement
      • CNY Trade balance (Wed)
      • NZD Cash Rate and Gov Wheeler speaks (Thur)
      • EUR ECB President Draghi speaks again (Thur)

REFERRALS: Client referrals are a very important part of our business. If you know of any contacts that could benefit from our comprehensive range of international currency transfer services, please do let me know. 

AUDUSD:

The AUD staged its first up week after 5 consecutive down weeks to close 3% higher. This was on the back of higher building approvals, improved GDP, a lower trade deficit and finally the NFP out of the US which printed a disappointing 38,000 V expected 160,000. Surprisingly enough US unemployment was down to 4.7%, the lowest since November 2007 which is the all time low. However the participation rate has dropped to a record low, see link below.
A June rate hike in the US is off the table and while we expected a July hike we think that is off the table too given the bad number. The short term support for the AUD which held for the last 2 weeks obviously was not broken but the short term resistance on the upside was after the NFP release. AUD is all of a sudden at a 3 week high where there is reasonable short term resistance. A good opportunity for importers who have been waiting for a rally.If this breaks we could see another 50 points of upside.

AUDEUR: The AUD finished the week flat against the EUR after 2 consecutive weeks of small gains. The 3.5 month low manged to hold again. ECB President Draghi’s comments did not give away much, especially hints of more stimulus. He speaks again on Thursday so the market will be looking to see if there are any hints of further stimulus which will put the EUR under more pressure.

AUDGBP: After 6 consecutive down weeks in which it dropped 12% the AUD staged a huge reversal against the GBP to close 3.75% higher for the week. This is not only on the back of an expected technical rally but bookmakers claiming 4 out of 5 wagers in the last week have been for a Brexit. The polls now suggest that momentum is moving back towards the “leave” camp. GBP opened lower than the close and there will be resistance at these levels as they previously held as support for 2 weeks before breaking.

AUDNZD: Kiwi as strong as the All Blacks and the best performing currency of the week. The AUD closed down around 1.5% against the NZD after briefly hitting a fresh 6 month low. This is after a positive slew of data from Australia last week. The last 3 times it has been down here AUD has had a solid rally. The currency is at attractive levels for exporters or those looking to convert NZD to AUD. 

AUDJPY: The AUD closed the week 1% lower against the JPY. It is still holding around the support levels which has held for 5 weeks now. The 4 month low back on 11th February has not been broken. The previous 2 times it was down here we saw solid rallies. There is no significant data out of Japan this week

AUDCHF: AUD posted a 0.75% gain against the CHF. The support levels for the AUD have now held for 4 weeks. Short term resistance is 50 points higher and if that breaks we could see another 50 points which is a reasonably big line in the sand.

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.

Compass Global Markets Team.

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