8th January - Daily Currency Market Report

CompassLandscape1

The Market in Brief:

AUD falls 5% in first wek of 2016
China crises?

US NonFarm Payrolls

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As of next week we’ll be writing a more in depth (but not too in depth!) weekly commentary that will be on subscribers desks first thing each Monday morning.

Ad-hoc commentaries will then be releaduring the rest of the week, dependent on price action and future events to watch for, which we’ll of course forward on as well.

In the meantime please see the below that gives us an idea on current A$ developments and what to target over the next 24 hours.

AUD/USD: Nonfarm Payrolls the straw to break the bull’s back?

08 January 2016

FXStreet

/Jim D.

AUDUSD

has been in sold off on the back of the Chinese equity market / currency crisis and thoughts the RBA
February meeting might be a close call with the central bank potentially wanting to preempt the inevitable headwinds. The price has taken out the December lows and opened up the possibility for a breakdown to the post Black Monday crisis downtrend and lows made in early September at 0.69 cents.

As mentioned above, the catalyst yesterday was the Chinese stock market, devaluation of the Yuan yet again and poor building approvals data in the Australian economy. Today, the stock market will be monitored yet again and so we

will be keeping an ear to the ground in respect of the Chinese authorities subsequent course of action to try and get a grip on and get stability back in the markets. Before all that, the Aussie retail sales will also be an event to watch while the Australian economy’s performance will now be strongly scrutinised ahead of the RBA meetings throughout Q1/H1.

Perhaps more importantly; non farm payrolls will be released in the US tonight and could be the straw that breaks the bull’s back if the report is strong, overriding the dovishness in the FOMC minutes. Conversely, it could be the Aussie’s saving grace with a headline number significantly less than 200k. The data really is so unpredictable that the suggested best course of action would be to place a market order to be executed at your set target rate.

AUD/USD levels
Technically, we are in a bearish trend with little in the way of support below until 0.6900 cents. However the lower Bollinger Band is extended whilst both the Stochastic and Relative Strength Indicators are recovering from oversold levels – all suggesting a good level to buy A$ now and potentially better levels to sell A$ in the very short term.

AUDUSD at 0.7100 is first key resistance while bulls may struggle with anything north of 0.7150.

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.

Jim Devonport

Corporate & HNW Client Manager

8th January – Daily Currency Market Report

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