Quick Recap
The Commonwealth bloc currencies are in the ascendancy this morning after a good nights trade. That means that trades I have on in GBP and Aussie are doing well and I am waiting for the Canadian dollar to break.
I wrote earlier at Business Insider on what I think is driving the US dollar that:
I think is the perception that Fed chair Yellen was dovish (i.e. delayed rate hikes) is gaining traction, which is a US dollar negative. Equally, there does seem to be some follow-through positivity for global growth – or at least risk-on – from QE, company results and the US recovery which is helping the Aussie dollar and the Commodity bloc currencies in general.
Helping reinforce buying for the Aussie and Kiwi in particular is the level of interest rates in each nation. Even with Aussie bonds near modern day lows that is still a long way from the -0.08% that Germany issued 5 year bonds at last night.
That’s not a typo – negative rates.
No one thinks the RBA is really going to cut rates much through 2% so there will still be a pickup into Aussie for bond investors.
On stock markets things were quiet but the ASX is interesting with the SPI indicating a down day today. Maybe I bailed on my shorts too soon.
But rules is rules! This is trading not punting.
On the day
On the data front today, we get the release of Private New Capital Expenditure in Australia. But it is a huge night offshore with the release of German unemployment, UK GDP, US CPI, and Durable goods. HUGE.
And here’s the overnight Scoreboard (8.44 am AEDT):
- Dow Jones: up 0.09%, 16 points to 18,225/li>
- Nasdaq: down 0.02% to 4,967
- S&P: down 1 point to 2,114
- ASX SPI 200 Futures: down 19 points to 5900
- FTSE: down 0.21%, 15 points to 6,935
- AUDUSD: 0.7886
- EURUSD: 1.1359
- Crude: $50.71
- Gold: $1,204
CHART OF THE DAY:
AUDUSD – testing the limits or about to break out: Capex is huge again today but the Aussie has found some real support
Having looked incredibly weak at 0.7733ish the other night the Aussie solid this morning.
We got our move through 0.7850 yesterday which then opened the move to 0.7890/0.7904 (0.7901ish the high).
Four hour charts are suggesting Aussie will dip a little towards 0.7850/60 with further downside support 0.7780 then last night’s low at 0.7733.
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