Jim Devonport
Compass Global Markets
Daily Currency Market Report – 24th July 2014
The market in brief:
• AUD rallies but NZD tanks
• Australian CPI remains strong
• Bank of England keep interest rates on hold
• RBNZ tighten interest rates to 3.50% as expected
Market moving events for the next 24 hours:
• Chinese Manufacturing
• French Manufacturing
• German Manufacturing
• UK Retail Sales
• US Weekly Unemployment Claims
• US New Home Sales
AUDUSD:
The Australian Dollar rallied strongly and touched fresh July highs as inflation data remained strong and kept the annual rate close to the upper band of the RBA comfort level. Today’s Chinese Manufacturing data is also expected to show continued growth so should keep the pressure on the upside. Nevertheless importers are not out the woods yet; one only has to look at price action over the last 2 months to see that these rallies are short lived. We therefore strongly suggest looking at alternative currency hedging for at least a portion of future exposure. These tools offer certainty of being fully hedged, but give the flexibility of being able to walk away from the contract at any time. Call us for more info.
AUDEUR:
The Euro continued to weaken yesterday as pressure mounts on the European Union to apply sanctions against the Russian, in response to issues in the Ukraine. This would obviously mean a struggling Russian economy, but more importantly the inability to purchase cheap oil and gas along with a stop on any arms or durable goods from the EU. WE have therefore broken through the yearlong trend line resistance that we have been harping on about for a while now and touched 7 month highs. We are showing signs of a top here; however technical resistance sits another 1 cent higher. As with the above commentary, instead of booking a traditional forward contract as a hedging tool, we suggest paying a small premium for the right to have certainty of a strong hedging rate, but the flexibility to discard that hedge and transact at a more advantageous rate in the future here. You can of course have a mix of both as a hedging policy. Call us for a fuller explanation and free quote.
AUDGBP:
The Pound has fallen across the board and touched fresh monthly highs against the Aussie as the Bank of England voted 9-0 in favour of keeping interest rates on hold and still refuse to accept that there is a growing need to hike. Retail Sales data is released this evening and is expected to show signs of a pickup. This may well mean this pair gives up some of its overnight rally, especially as we look to UK GDP data tomorrow that is also expected to be healthy.
AUDNZD:
The Tasman Cross has rallied 120 points this morning as although the RBNZ tightened monetary policy to 3.50% but mentioned the New Zealand dollar is now "unjustified and unsustainable" with the "potential for a significant fall”. Economists are now suggesting the central bank are on hold until Q1’15. We now trade around 1 month highs and sit NZD 1 cent below our target level.
Quote of the day: “Time is what we want most, but use worst.” William Penn.
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 if the rate improves or if not required.
Referrals: Client referrals are very important to our business. If you know of any contacts that can benefit from our comprehensive range of international currency transfer services, please do not hesitate to contact me. I’d be glad to assist.
The market in brief:
• AUD rallies but NZD tanks
• Australian CPI remains strong
• Bank of England keep interest rates on hold
• RBNZ tighten interest rates to 3.50% as expected
Market moving events for the next 24 hours:
• Chinese Manufacturing
• French Manufacturing
• German Manufacturing
• UK Retail Sales
• US Weekly Unemployment Claims
• US New Home Sales
AUDUSD:
The Australian Dollar rallied strongly and touched fresh July highs as inflation data remained strong and kept the annual rate close to the upper band of the RBA comfort level. Today’s Chinese Manufacturing data is also expected to show continued growth so should keep the pressure on the upside. Nevertheless importers are not out the woods yet; one only has to look at price action over the last 2 months to see that these rallies are short lived. We therefore strongly suggest looking at alternative currency hedging for at least a portion of future exposure. These tools offer certainty of being fully hedged, but give the flexibility of being able to walk away from the contract at any time. Call us for more info.
AUDEUR:
The Euro continued to weaken yesterday as pressure mounts on the European Union to apply sanctions against the Russian, in response to issues in the Ukraine. This would obviously mean a struggling Russian economy, but more importantly the inability to purchase cheap oil and gas along with a stop on any arms or durable goods from the EU. WE have therefore broken through the yearlong trend line resistance that we have been harping on about for a while now and touched 7 month highs. We are showing signs of a top here; however technical resistance sits another 1 cent higher. As with the above commentary, instead of booking a traditional forward contract as a hedging tool, we suggest paying a small premium for the right to have certainty of a strong hedging rate, but the flexibility to discard that hedge and transact at a more advantageous rate in the future here. You can of course have a mix of both as a hedging policy. Call us for a fuller explanation and free quote.
AUDGBP:
The Pound has fallen across the board and touched fresh monthly highs against the Aussie as the Bank of England voted 9-0 in favour of keeping interest rates on hold and still refuse to accept that there is a growing need to hike. Retail Sales data is released this evening and is expected to show signs of a pickup. This may well mean this pair gives up some of its overnight rally, especially as we look to UK GDP data tomorrow that is also expected to be healthy.
AUDNZD:
The Tasman Cross has rallied 120 points this morning as although the RBNZ tightened monetary policy to 3.50% but mentioned the New Zealand dollar is now "unjustified and unsustainable" with the "potential for a significant fall”. Economists are now suggesting the central bank are on hold until Q1’15. We now trade around 1 month highs and sit NZD 1 cent below our target level.
Quote of the day: “Time is what we want most, but use worst.” William Penn.
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 if the rate improves or if not required.
Referrals: Client referrals are very important to our business. If you know of any contacts that can benefit from our comprehensive range of international currency transfer services, please do not hesitate to contact me. I’d be glad to assist.
Compass Global Markets Pty Ltd ("Compass Global Markets") ACN 144 657 885, Authorised Representative No. 377377, is a Corporate Authorised Representative of Calibre Investments Pty Ltd (Australian Financial Services License No. 337927). Please refer to the Financial Services Guide which is available through our website www.compassmarkets.com for more information regarding the financial services that we offer. All references to prices, amounts and currency are in Australian dollars unless otherwise noted. This report is provided for Australian residents only and is not intended for use by residents of any other country. GENERAL ADVICE WARNING: The advice provided in this report has been prepared without taking into account your particular objectives, financial situation or needs. You should, before acting on the advice, consider the appropriateness of the advice having regard to these matters and, if appropriate, seek independent financial, legal and taxation advice before making any financial investment decision. This report has been prepared for the general use of Compass Global Markets clients and must not be copied, either in whole or in part, or distributed to any other person. This report and its contents are not intended to be construed as a solicitation to buy or sell any security, product or asset, or to engage in or refrain from engaging in any transaction. Compass Global Markets does not guarantee the performance of any investment discussed or recommended in this report. This report and the information used within may include estimates and projections which constitute a forward looking statement that express an expectation or belief as to future events, results or returns. No guarantee of future events, results or returns is given or implied by Compass Global Markets. Such statements are made in good faith and based on reasonable assumptions at the time of publication. However, such statements are also subject to risks, uncertainties and other factors which could cause actual results to differ substantially from the estimates and projections contained in this report or otherwise provided by Compass Global Markets. Any information referencing past performance is not indicative of future performance. All information in this report has been obtained from sources believed to be accurate. Compass Global Markets does not give any representation or warranty as to reliability, accuracy or completeness of information contained in this report and therefore all responsibility is expressly disclaimed, whether due to negligence or otherwise. The information presented and opinions expressed in this report are given as of the date hereof and are subject to change without notice. We hereby disclaim any obligation to inform you of any changes after the date hereof in any matter set forth in this report. Global Compass Markets, its affiliate and their employees may hold positions in the financial products, or securities or derivatives of, in the companies referred to in this report from time to time. Analyst Certification: The views or opinions expressed in this report accurately reflect the personal views of the analyst(s) and no part of the remuneration of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this report. Any views or opinions expressed are the author's own and may not reflect the views or opinions of Compass Global Markets unless specified otherwise.
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