The market in brief:
- AUD drops to the other side of the range
- NZD falls sharply as well
- Australian Retail Sales as expected
- Australian Trade Balance worse than forecast
- RBA Dep Gov surprises with hawkish speech
- Bank of England keep monetary policy as is
- ECB leave rates unchanged but to buy bonds
- US Weekly Unemployment Claims
- Gold falls to $1,197 & Oil lower at $51.24
Market moving events for the next 24 hours:
- US Non-Farm Employment Change
- US Unemployment Rate
- US Trade Balance
- Chinese Trade Balance (Sunday)
AUD-USD: The Australian Dollar fell back to the bottom of its week long USD 1 cent range overnight as commodities weakened and on general US Dollar strength. The move came despite a speech from RBA Deputy Governor Lowe who said that the Aussie is closer to fair value and also that they do have scope for further interest rate cuts, which some have taken to mean that there may not be another one to come in the near future, if at all. There is no domestic data today, so we should hold these lows for you exporters, but then turn our attention to the US jobs numbers and Chinese data over the weekend. As ever, with such important economic data we suggest placing orders in the market to take advantage of beneficial spikes in your favour. A break lower will target the bottom of the upward channel, 60 points below whilst the upside targets are 100 then 175 points away.
AUD-EUR: The European Central Bank has kept interest rates at just 0.05% and we await details of their Eur 1 trillion asset purchasing program that will be looking to buy bonds in the secondary market. The Euro has fallen to a near 12 year low against the US Dollar and is now down 20% since the middle of last year, with forecasts of further moves to come. There is no EU data today, so we look to the charts in to see this pair is sat in the middle of the upward channel and appears set to continue correcting lower from these overbought levels. The upcoming weekend will be all the excuse needed so we’d suggest importers may look to get in early. Exporters, initial support sits 75 points below.
AUD-GBP: The Pound has strengthened here as the Australian Dollar weakened the most against the stronger US Dollar. The Bank of England held interest rates at 0.50%, as has been the case since March 2009. Apart from Europe, the major factor effecting Sterling is the political situation as we head towards what is set to be the closest election in modern history. Voters go to the polls in May, so we cannot see any sizeable medium term strength from Sterling before then. Direction from this pair is more likely to come from the Aussie and so we favour the range holding medium term, with a slight upward bias. Especially as we trade around the psychological 50 cent / 2:1 area.
AUD-NZD: The Tasman Cross has rallied over 120 points due to Dep Gov Lowe’s speech and the markets re-assessment that the interest rate differential between the two nations may not increase as earlier thought. Fresh NZ data is not due till next week and with all Australian numbers out of the way we can safely say the lows should not be tested near term. NZD buyers with AUD receipts may want to jump on this recovery however.
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