Even more "interesting" than I thought..

March 27, 2018

Finport Currency Brief - Courtesy of Compass Global Markets.

 

Good morning all;

 

AUDUSD:  My promise in Monday's report of an "interesting run in to Easter" is certainly playing out as the A$ rallied off it's lows at the start of the week, but has now turned into the worst performing G10 currency over the last 24 hours. A lack of risk appetite, Chinese financial tightening, no foreseeable hike from the RBA, trade war fears, Geo-political tensions along with commodity and equity market sell offs are creating the perfect storm. US GDP data comes in this evening and is expected to show a pick up, so may dent the A$ even further. However for us bulls this is a healthy clean out, because with all this negativity the local currency is still relatively strong. Imagine where we'd be once this is washed through the system and the good news starts to roll in? Technically we must hold 0.76c, however I feel we may even be able to afford a "false break" so still favour 0.80 before 075.

 

AUDEUR: We now sit bang on 2 year highs as the A$ suffered the most of these two currencies from the US$'s resurgence. EU data that saw a drop in Money Supply and a weaker Spanish Inflation print were ignored for all the reasons stated above. If any Euro buyers are looking for good news it's that we are still above 0.61c, being the long term average of the 2008 lows to 2012 highs. That level should contain the sell off for the time being at least.  

 

AUDGBP: As previously forecast this pair is really chugging along now and getting a head of steam as the Pound continues its correction versus the US$ - leaving the A$ in its wake. UK Current Account data and GDP numbers are due tomorrow, but in this environment any correction for this pair is only expected to be brief and one to be pounced on by GBP buyers. Suggest 0.55p as a good target.

 

Jim Devonport

E: jim.devonport@finport.com

M: 0415 066 468 


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