Jim Devonport
Compass Global Markets
Compass Global Markets Daily Currency Market Report 24th November 2014
The market in brief:
AUD up over USD 1 cent on Friday night
NZD also rallies but loses all gains by the close
Central Bank of China cuts interest rates
European Cent Bk President hints at further stimulus
UK Public Sector Net Borrowing up
UK political situation starts to wobble
Market moving events for the next 24 hours:
Swiss Nat Bk Chairman Speaks
Japanese Public Holiday
German Ifo Business Climate Survey
AUDUSD: The Australian Dollar appeared to be meandering to a quiet close when the Peoples Bank of China suddenly announced they had cut interest rates to 5.6% from 6.0%. This went against most analysts’ expectations for other more subtle stimulatory measures to come medium term. That news and dovish comments from the ECB Chief, (see below), saw the AUD rally over 120 points from its lows, although gave up 50 points as the market squared up for the weekend. The week ahead is set to be short with Japanese traders away from their desk celebrating Labour Thanksgiving and the US have theirs on Friday. There is no major data set to come until Thursdays domestic Private Capital Expenditure, but even that isn’t likely to provide too many shocks. Although RBA Deputy Governor Lowe is likely to put a dampener on things in his speech tomorrow, we see the Aussie well supported with a gradual upside bias, especially should the PBoC have any further comments. Call us for target levels
AUDEUR: A very tight range held throughout the whole Asian session until the European Central Bank President Draghi suggested further and potentially stronger monetary policy easing measures are to come. He went on to mention his disappointment with growth prospects and alarm at inflation levels. The ECB meet on the 4th of December when they will issue their new economic forecasts. With the Aussie supported somewhat and the downward pressure due to continue for the single currency this pair should push to fresh lows. On the chart we sit bang on the 50% Fibonacci retracement of the 3 month range with a break expected in due course. Our target has to be the early September highs.
AUDGBP: The Pound suffered due to the dour comments from its European trading partner but also as the ruling Conservative Party took another hit in a local bi-election. The UK Independence Party, that are staunchly anti-immigration, have won another seat that many political journalists are predicting won’t be their last. The General Election is set for 6 months time and now likely to end in a hung parliament. The political uncertainty has therefore added to the Pounds woes. BoE Governor Carney speaks tomorrow and UK GDP is released Wednesday. Neither is due to shake price action and so should sentiment continue we have our target at the 38.2% retracement of the 2 year range, which is 2 pence higher than the 23.6% level that we currently sit on.
AUDJPY: Another rally for this pair as the Japanese Yen continues to fall out of favour and as the Australian Dollar benefits from external factors, (see above). The December 14th Japanese elections will likely ensure the upside will be a slow grind, but in the meantime we look to comments from BoJ Governor Kuroda tomorrow as our main focus, as there are no other meaningful fundamental events set to come before voting begins.
AUDNZD: Despite the cut in Chinese interest rates the NZ Dollar gave up its gains as the market looked to sell the Kiwi into any strength. This resulted in the Tasman cross bouncing back to the top of the week long range as the rate cut will benefit the Australian economy well before it does that of NZ. Inflation Expectations are tomorrow and Trade Balance numbers on Thursday, where the deficit is expected to be halved. A big call! Technically nothing has changed and the upward channel remains in play.
Thought for the day: What's happened has happened, so we ask what can we do to make it better for tomorrow and the day after? That's why we're here. Ian Botham (Born this day in 1955)
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.
Jim Devonport
The market in brief:
AUD up over USD 1 cent on Friday night
NZD also rallies but loses all gains by the close
Central Bank of China cuts interest rates
European Cent Bk President hints at further stimulus
UK Public Sector Net Borrowing up
UK political situation starts to wobble
Market moving events for the next 24 hours:
Swiss Nat Bk Chairman Speaks
Japanese Public Holiday
German Ifo Business Climate Survey
AUDUSD: The Australian Dollar appeared to be meandering to a quiet close when the Peoples Bank of China suddenly announced they had cut interest rates to 5.6% from 6.0%. This went against most analysts’ expectations for other more subtle stimulatory measures to come medium term. That news and dovish comments from the ECB Chief, (see below), saw the AUD rally over 120 points from its lows, although gave up 50 points as the market squared up for the weekend. The week ahead is set to be short with Japanese traders away from their desk celebrating Labour Thanksgiving and the US have theirs on Friday. There is no major data set to come until Thursdays domestic Private Capital Expenditure, but even that isn’t likely to provide too many shocks. Although RBA Deputy Governor Lowe is likely to put a dampener on things in his speech tomorrow, we see the Aussie well supported with a gradual upside bias, especially should the PBoC have any further comments. Call us for target levels
AUDEUR: A very tight range held throughout the whole Asian session until the European Central Bank President Draghi suggested further and potentially stronger monetary policy easing measures are to come. He went on to mention his disappointment with growth prospects and alarm at inflation levels. The ECB meet on the 4th of December when they will issue their new economic forecasts. With the Aussie supported somewhat and the downward pressure due to continue for the single currency this pair should push to fresh lows. On the chart we sit bang on the 50% Fibonacci retracement of the 3 month range with a break expected in due course. Our target has to be the early September highs.
AUDGBP: The Pound suffered due to the dour comments from its European trading partner but also as the ruling Conservative Party took another hit in a local bi-election. The UK Independence Party, that are staunchly anti-immigration, have won another seat that many political journalists are predicting won’t be their last. The General Election is set for 6 months time and now likely to end in a hung parliament. The political uncertainty has therefore added to the Pounds woes. BoE Governor Carney speaks tomorrow and UK GDP is released Wednesday. Neither is due to shake price action and so should sentiment continue we have our target at the 38.2% retracement of the 2 year range, which is 2 pence higher than the 23.6% level that we currently sit on.
AUDJPY: Another rally for this pair as the Japanese Yen continues to fall out of favour and as the Australian Dollar benefits from external factors, (see above). The December 14th Japanese elections will likely ensure the upside will be a slow grind, but in the meantime we look to comments from BoJ Governor Kuroda tomorrow as our main focus, as there are no other meaningful fundamental events set to come before voting begins.
AUDNZD: Despite the cut in Chinese interest rates the NZ Dollar gave up its gains as the market looked to sell the Kiwi into any strength. This resulted in the Tasman cross bouncing back to the top of the week long range as the rate cut will benefit the Australian economy well before it does that of NZ. Inflation Expectations are tomorrow and Trade Balance numbers on Thursday, where the deficit is expected to be halved. A big call! Technically nothing has changed and the upward channel remains in play.
Thought for the day: What's happened has happened, so we ask what can we do to make it better for tomorrow and the day after? That's why we're here. Ian Botham (Born this day in 1955)
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.
Jim Devonport
Corporate & High Net Worth Client Manager
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