Compass Global Markets' Blog

7th March 2017 - Weekly Currency Market Report.

Posted by Thomas Su on March 7, 2017 at 10:25 AM

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The Market in Brief:

                                                          • AUD down V USD, EUR, CHF up V GBP, JPY, NZD
                                                          • AUD GDP 1.1% V expected 0.7%.
                                                          • U.S. data mixed
                                                          • U.K. data mixed
                                                          • China Caixin Manuf. 51.7 V expected 50.9

Market Events Due:

                                                      • AUD Retail Sales (Mon) 0.4% as expected Cash Rate and RBA Statement (Tue)
                                                      • CNY Trade Balance (Wed)  CPI y/y (Thur)
                                                      • GBP Annual Budget Release (Wed) Manuf Prod m/m (Fri)
                                                      • EUR Cash Rate (Thur) ECB Press Conference (Fri)
                                                      • USD Non Farm Payrolls and Unemployment Rate (Sat)


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AUD/USD: Closed the week down 1% after having its biggest one day sell off in almost 3 months on Thursday where it was down 1.8% for the week at one stage to post a fresh 5 week low. So it did not at any stage test the 3 month high hit the previous week confirming once again on the charts that 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. Importers can target 100 points above. There is a lot of AUD data this week with Retail Sales on Monday (printed 0.4% as expected) and the RBA expected to leave rates on hold at 1.5% on Tuesday. In the U.S. there is Non Farm Payrolls and the Unemployment Rate Saturday morning. Any unexpected results will add volatility but for the time being it looks like the AUD has run out of steam.

AUD/EUR: Closed the week down 1.7% as it drifts off the the 44 month highs hit 2 weeks ago, despite poor EU Retail Sales data. The market should however hold around here for the next couple of days, maybe even recover some lost ground as we have the RBA meet tomorrow and ECB meet on Thursday. Once those two risk events are out of the way, we should get back to our gentle drift lower as the market takes this paid back to more recent fair value, either side of 0.70c.

AUD/GBP: Has traded largely flat over the past week as the AUD sell off was matched by that of the Pound, with the release of weaker Manufacturing and Services sector data. There is no major UK data due until next week, so focus will be on local developments and of course any fall out from what ever twist and turns the BREXIT discussions throw up. On the charts we still favour a more sideways price action and still ideal levels for those GBP buyers.  

AUD/NZD: Has started its more medium to longer term recovery as the NZ$ starts to fall out of favour with the rest of the world, due to the RBNZ Governor stepping down and up coming national election. Dairy prices are our only NZ centric focus this week and given the sizeable falls of the past couple of months, we’d see no real reason to believe any meaningful selloff is to occur. Target 1.10+ in the next few weeks?

AUD/JPY: AUD had its first up week in 3, closing 0.6% higher after bouncing off short term support at the lower end of the 3-month long upward channel. Although there is a small chance of a break to the downside, the overall trend remains up and with the lack of comments over the Yen’s weakness we’d not rule out this shorter term channel holding for another push higher again.

AUD/CHF: Sits bang on the 50% retracement of the range seen since the start of February, with technical indicators also suggesting we are mid range. Looking ahead we’d favour a bounce higher with an RBA on hold, however some way off from forecasting a break of the fresh 2 year highs seen  2 weeks ago.

Compass Global Markets Team.

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