All eyes on the Fed

March 21, 2018

Finport Currency Brief - Courtesy of Compass Global Markets.

 

Good morning all;

 

AUDUSD:  My forecast 0.79c target was hit last week, however the Australian Dollar has drifted lower over the last few days, despite comments from the Reserve Bank that low interest rates are playing a part in lowering unemployment and lifting inflation.  Instead the market is looking to tomorrow mornings US Federal Reserve meet, at which we expect interest rates to get hiked to 1.75%. The move is virtually 100% priced in, so it will be comments on future tightening that will get our attention. Any hint of a "wait and see" could see this pair recover towards 0.79c once again.

 

AUDEUR: The Euro has also weakened across the board, meaning Aussie Euro has actually traded slightly higher. News overnight that the German ZEW Indicator of Economic Sentiment dropped 30% from its reading last month hurt the common currency and was attributed to global trade concerns following US President Trump’s implementation of steel tariffs. There is no major EU data for the rest of the week so I target 0.63c to be taken again very shortly. 

 

AUDGBP: News that the EU and UK have moved a step closer to BREXIT has seen this pair drop sharply, despite weak UK inflation data release yesterday. We now sit at near 2 year lows with UK Retail sales data and the Bank of England meet to come tomorrow. The central bank is expected to pave the way for an interest rate hike in May, so should see us track lower still.  2.0/0.50?

 

Jim Devonport

E: jim.devonport@finport.com

M: 0415 066 468 


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