Compass Global Markets' Blog

21th February 2017 - Weekly Currency Market Report.

Posted by Thomas Su on February 21, 2017 at 10:06 AM



The Market in Brief:

                                                      • AUD down against the majors except EUR and GBP.
                                                      • AUD hits multi month and multi year highs V majors.
                                                      • AUD unemployment rate down from 5.8% to 5.7% and jobs +13,500 V expected +9,700
                                                      • All U.S. data above expectations.
                                                      • U.K.  data mixed.

Market Events Due:

                                                  • NZD PPI Input q/q (Mon) GDT Price Index (Wed)
                                                  • RBA Monetary Policy Meeting Minutes (Tue) Governor Lowe speaks (Wed) Privat Capex q/q (Thur) Governor Lowe speaks (Fri)
                                                  • GBP Second Estimate GDP q/q (Wed)
                                                  • CAD Core Retail Sales m/m (Thur) CPI m/m (Sat)

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AUD/USD: AUD hit a fresh 3 month high on Thursday, rallying 8% in 8 weeks from its lows at the end of December. It is off 1% from those highs where it closed the week down just 17 points. It managed to get within 50 points of the high on November 8 when Trump was elected. On the charts these levels have proved strong resistance since this support level was broken back in June 2015. That support level had held back to January 2015 so it is a big line in the sand. Commodity prices have had a solid rally, in particular iron ore which has helped bolster the AUD. Whilst back in December most economists had another rate cut factored in for the first half of this year that has now abated.

AUD/EUR: AUD hit a fresh 22 month high on Thursday, rallying almost 7% in 8 weeks from its lows at the end of December. It is off almost 1% from those highs where it closed the week down just 5 points.On the charts these levels of resistance have held in place since July 2013.

AUD/GBP: Closed the week up 0.2% but was still shy of its recent high 4 weeks ago and 2% shy of its 40 month high back in October. U.K data was mixed but the majority of recent data has been above expectations. Last week those claiming unemployment benefits were expected to increase by 1,100 but they decreased by 42,400. Concern over the Brexit is still weighing heavily on the GBP. 

AUD/NZD: AUD posted a 4 month high against the NZD on Friday but closed the week down a tiny 4 points. On the charts these levels have held since July last year. The AUD rally has been quite significant over the past 3 weeks given that 3 weeks ago it was at a 5 month low. So these levels still represent a very good opportunity for importers.

AUD/JPY: AUD posted a fresh 14 month high against the JPY on Thursday before falling 1.8% to close the week down almost 1%. The relatively tight range of 3.5% that held for 3 months was broken to the upside but quickly reversed. Still a great opportunity for importers while exporters can chip away on dips

AUD/CHF: AUD posted a fresh 2 year high against the CHF on Thursday before dropping 1.2% to close the week 20 points lower. The CHF is still tracking very closely to the EUR. On the charts it is still a very good opportunity for importers.

Compass Global Markets Team.

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