Daily currency market report

Daily Currency Market Report – 23rd June 2014

 The market in brief:                                                                                          

·        A quieter end to the week

·        UK Public Sector Net Borrowing up as expected

·        Euro zone Current Account improves

·        Canadian inflation sharply higher

Market moving events for the next 24 hours:

·        Chinese Manufacturing

·        German and French Manufacturing

·        US Existing Home Sales

AUDUSD: 

A quieter end to the week that sees the Australian Dollar trade within a 40 point range and close just shy of the day’slows. Importers were happy to take advantage of Thursdays Federal Reserve's FOMC inspired rally, especially given the selloff that had many thinking the currency was headed back to the other side of the range, over USD 2 cents below. Looking ahead and the focus is centred offshore today with Chinese Manufacturing and US Existing Home Sales data and actually remains in those two countries for the rest of the week with other releases that we will discuss over the coming days. On the charts and signs are that the next couple of days could be the last chance for exporters before the rally resumes. We favour a shallow dip, perhaps even USD 1 cents lower, but a recovery and eventual break higher through the top of the 3 month range. As an aside we must mention the situation in Iraq and comments from the US. Should tensions rise further, then the AUD will suffer due to the expected fall in investors risk appetite.   

AUDEUR:

Friday’s price action was set by the border of the range traded on Thursday. The lack of major economic data here, another healthy print from Europe and EU ECOFIN meeting meant traders were happy to keep the pair away from the highs again. Today sees French and German Manufacturing Purchasing Managers Index data, however tomorrows German Ifo Business Climate survey and Fridays German Inflation prints are perhaps the more important. Actually all EU data this week is expected to show a solid pickup, so having tested and failed our targeted highs we cannot see any reason for the top side to be broken this week. In fact we'd go as far as to say we expect a retracement lower for this pair as well. 

AUDGBP: 

Public Sector lending improved from GBP 9 billion to GBP 11.5 billion and saw the market test lows seen earlier in the week. Looking ahead BoE Governor Carney speaks tomorrow (Treasury Committee hearing) and Thursday (on the housing sector) whilst the UK's Current Account data is due Friday. The data is expected to show an improvement and any slightly hawkish comments, especially over the timing of interest rate hikes,from the Governor earlier in the week should see the Pound strengthen. We therefore expect a pull back to at least the lows of last week and potentially even further.  

AUDNZD: 

The Tasman Cross remains anchored at the recent levels as the Australian Dollar falls was sold off and away from the recent highs across the board. The only piece of economic data of note from NZ this week is the Trade Balance number due on Friday. This is expected to be weaker than last month’s read and with no Aussie data at all we'd there fore expect the Australian Dollar to hold within the range, until later in the week and with the potential for a late rally then. 

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