Compass Global Markets' Blog

21st November 2016 - Weekly Currency Market Report.

Posted by Thomas Su on November 21, 2016 at 11:18 PM

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The Market in Brief:

                                      • AUD down against the majors with the exception of JPY.
                                      • US rate hike of 0.25% fully priced in for 15 Dec 2016.
                                      • USD index, DXY has risen for 10 consecutive days to a 14 year high. 
                                      Majority of US data printing above expectations.

Market Events Due:

                                    • EUR Draghi speaks (Tue) German Ifo Business Climate (Thur) 
                                    • USD Core Durable Goods Orders m/m, Unemployment Claims, FOMC Meeting Minutes
                                    GBP Second Estimate GDP q/q (Fri)


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AUDUSD: The AUD closed down for the second consecutive week against the USD. Since Donald Trump was elected as US President and announced inflationary economic policies of a high spend low tax regime the USD has soared. A rate hike of 0.25% is fully priced in for 15th December and the USD index is up for the 10th consecutive day to a fresh 14 year high. AUD is down 5.75% against the USD in just 8 trading days.It has gone from a 7 month high to a 5 month low and is at a critical level of support. The last time it was down here was Brexit day where it held for 3 days before recovering its losses over the next 3 weeks. The chances of a similar recovery are less this time given the move is associated with Trump's policies more so than just the fact he has been elected. If this level breaks there is support 50 points below, with the next level 150 points below which was the low back in May.

AUDEUR: The AUD has fallen 2% against the EUR over the last 4 trading days after posting a fresh 18 month high the week before. There is short term support here as this level provided solid resistance for 16 months before it was finally broken. Importers with time on their side can target short term resistance 1% higher.

AUDGBP: The AUD posted its third consecutive weekly loss against the GBP. It is now at a 7 week low against the GBP giving buyers of AUD a very good opportunity. AUD is now down 6.75% from the 40 month high at the end of October.

AUDNZD: The AUD closed the week down against the NZD giving up almost all of its gains from the week before. We are only 200 points above the 17 month low in mid September so a good opportunity for those looking to convert NZD to AUD. Those with time on their side can target the 17 month low back in mid September.

AUDJPY: The AUD posted its second consecutive weekly gain against the JPY and actually posted a 7 month high last Wednesday. There is resistance here as this level acted as support on the way down for many months before it was finally broken earlier this year in May. Importers can target the 7 month high last Wednesday while exporters can target 100 points lower.

AUDCHF: AUD posted its fourth weekly drop against the CHF but it is down 3.5% so the drop is nowhere near as severe as that of AUDUSD or AUDGBP. The drop is also coming off a fresh 18 month high for AUDCHF so for the big picture the AUD is still very much toward the upper end of the range for importers.

AUDCHF: AUD closed the week down 0.85% posting its second consecutive weekly drop against the CHF down 2.6% from its fresh 18 month high 2 weeks ago. In the short term support sits 50 points below with resistance 1% higher.  

Compass Global Markets Team.

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