US$ strength sees support tested

Finport Currency Brief - Courtesy of Compass Global Markets.

Good morning all;

AUDUSD: The sell off seen at the end of last week has continued at the start of this, as US bond yields have risen to 2.996%, being their highest in 4 years. With global political tension and increasing concerns of a stock market rort investors have piled into the US$ bond market as a safety play. Interestingly however this currency pair hangs in at technical support of the long term upward channel, in place since Q3'15. So with domestic inflation data due today and US GDP numbers later in the week, we'll either get a bounce or break. I favour the former, but should we sink then the next line in the sand is 3c below.

AUDEUR: The Euro has also strengthened against the A$, as data showed both French and German private sector growth expanded at a faster pace than forecast in April. We have another bout of EU data due either side of the European Central Bank's meeting on Thursday, so expect more volatility for this pair as we test the lows that have largely held since 2010.

AUDGBP: The Pound has recovered all of last weeks sizeable sell of, as investors buy into what most considered to be a short term correction in a longer term trend. UK GDP data is due on Friday, but that is not expected to have too much effect on price action as most results of that number have been a +0.5% read each quarter since late 2014. On the charts we appear headed to 0.5275, which is the 50% retracement of the low to high move seen from Aug'15 to Oct'16.

Jim Devonport


M: 0415 066 468




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