Daily currency market report

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.