Compass Global Markets' Blog

22nd August 2016 - Weekly Currency Market Report.

Posted by Thomas Su on August 22, 2016 at 12:49 PM

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The Market in Brief:

                      • AUD down across the board against the majors
                      • AUD Jobs print above expectations and unemployment down a tick to 5.7% 
                      • GBP data above expectations and GBP rallies across the board.
                      • USD data prints above expectations with mixed reactions against majors
                      • NZD Kiwi data shoots the lights out
                      EUR best performing currency (go figure) slightly ahead of NZD

Market Events Due:

                    • JPY BOJ Governor Kuroda speaks (Mon)
                    • EUR German IFO Business Climate (Thur)
                    • USD Core Durable Goods Orders and Unemployment Claims (Thur) Prelim GDP (Fri) Fed Chair Yellen speaks
                    GBP Second Estimate GDP (Fri)


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AUDUSD: The AUD finished the week down 30 points against the USD, after posting gains the previous 3 weeks, to be at its lowest level in 12 trading days. It was a volatile week with with AUD data printing above expectations and USD printing above expectations and managing to slightly outperform. AUD manged to close at the short term support levels. Importers can target levels 1.5% higher where there is solid resistance. Markets still have a 50/50 chance of a rate cut in November while chances of a Fed rate hike this year are 50/50 for December. 

AUDEUR: The AUD closed the week about 1.75% lower against the EUR. The strong levels of resistance that have held in place for the last 5 weeks and going back further to November last year held their ground. The German ZEW Economic Sentiment printed way below expectations but the EUR still managed to rally. There is short term suppport at this level so importes may get another opportunity towards the end of the week if AUD manages to stage a rally.

AUDGBP: As forecast after reaching post Brexit highs on Tuesday the AUD closed the week down almost 1.75% lower against the GBP which had data print above expectations. CFTC data for the week showed speculative accounts of net GBP shorts reached a record level which suggested there will be a correction in the GBP and this is what we saw. AUD is back down to the post Brexit highs so there will be short term support here. Markets are now saying we are in the sell GBP zone again but we are not convinced. Up until the Brexit the UK economy was outperforming the rest of Europe. 

AUDNZD: AUD finished the week down 1.75% against the Kiwi which was the second strongest performing currency of the week. The Wallabies finished the week down 42-8 against the All Blacks which was their biggest loss on home soil in 113 years. There is short term support for the AUD here so we expect a bounce and likewise for the Wallabies even though their win rate is only 25% in NZ. The market is expecting another 2 cuts by the RBNZ, in November and by June next year. Locally there is a 50/50 chance of a cut by the RBA in November. 

AUDJPY: The AUD has now closed down for the fourth consecutive week against the JPY. There is short term support here and we are still 300 points above above the post Brexit lows which have held as support back since 2010.

AUDCHF: Similar to the EUR the AUD has been unable to break the medium term resistance which has held for the last 5 weeks and over the longer term the last 16 months. The AUD closed the week down around 2% against the CHF and is down 3.5% in just 8 trading days.

Compass Global Markets Team.

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