Compass Global Markets' Blog

14th March 2017 - Weekly Currency Market Report

Posted by Thomas Su on March 14, 2017 at 12:54 PM

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The Market in Brief:

                                                            • AUD continues exactly the same trend as last week V the majors namely down V USD, EUR, CHF up V GBP, JPY, NZD
                                                            • RBA leaves rates on hold at 1.5% as expected.
                                                            • CNY Trade Balance -60bn V expected +173 bn CPI y/y 0.8% V expected 1.9%
                                                            • ECB leaves rates at 0% as expected
                                                            • USD Non Farm Payrolls +235k V expected +196k with Unemployment Rate steady at 4.7%

Market Events Due:

                                                        • CNY Industrial Production y/y (Tue)
                                                        • USD PPI (Tue) CPI m/m & Retail Sales m/m (Wed) Federal Funds Rate and FOMC Statement Building Permits Philly Fed Manufacturing Index (Thur) Prelim UoM Consumer Sent (Sat)
                                                        • GBP Average Earnings Index 3m/y &  Claimant Count Change (Wed) MPC Official Banks Rate Votes & Monetary Policy Summary & Official Bank Rate(Thur)
                                                        • AUD Employment Change & Unemployment Rate (Thur)


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AUD/USD: Had its second consecutive down week, closing 0.6% lower after hitting a fresh 2 month low on Thursday and then rebounding on Friday. This was after Friday nights US Non Farm Payrolls which printed +235k in February on the back of +238k in January, the largest back to back rise since July last year. A rate rise by the Fed from 0.75% to 1% is now 100% priced in on Thursday at 5 am. Importers with time on their side can target the solid resistance that is 2% higher or chip away at 50 point intervals. Exporters or those buying AUD can target last Thursday's 2 month low which is 1% below current levels. There is a slew of data this week so anything missing expectations will generate volatility.

AUD/EUR: Also had its second consecutive down week closing 1.25% lower and down 3.5% down since the fresh 44 month high 3 weeks ago. On the charts there is quite solid support as this level held as resistance before it was broken back to October last year. So a good opportunity for exporters or those looking to buy AUD while importers can target 1% higher as the next level of short term resistance. 

AUD/GBP: Had its second consecutive up week, closing the week up 0.4%. The pound still looks like a busted so I am wary, with AUD just shy of the highs 2 weeks ago and 1.5% below the 44 month highs back in October. A very good opportunity for those looking to buy GBP. Exporters or those looking to buy AUD can target 1% lower.  

AUD/NZD: Continued its more medium to longer term recovery as the NZ$ starts to fall out of favour with the rest of the world, posting its 3rd up week in a row and the only advantage we have over the Kiwis given we are heading into Rugby season. The 1.10 target is getting closer on the radar. This move is more so NZD weakness than AUD strength with Kiwi down across the board. AUDNZD is up almost 6% since its 4.5 month low 6 weeks ago.

AUD/JPY: AUD had its second consecutive up week, closing a mere 11 points higher after briefly breaking the short term support at the lower end of the 3-month long upward channel. So for the time being we are back to the overall uptrend. Exporters can target the short term support 100 points lower while importers can target short term resistance 60 points higher. 

AUD/CHF: Had its second consecutive down week, closing down 0.4% and down 2.5% since its 22 month high 3 weeks ago. Those levels look a fair way off now but on the charts there is solid support here as this level acted as resistance for the last couple of years before it broke to the upside. 

Compass Global Markets Team.

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