A$US$ consolidation at firm support levels

Finport Currency Brief 

 

Good morning all;

 

AUDUSD: Has continued to hug firm trend line support north of 0.75c as US economic data released over the past week has been mixed. The Core Personal Consumption Index is the US Federal Reserve's favoured inflation gauge and that beat expectations, therefore cementing an interest rate hike in a fortnight. However, US GDP and Consumer Confidence numbers disapointed and tonights all important US "Non-Farm Payroll" unemployment numbers will have center stage, so we'd expect a spike for this currency pair should that fall below 190,000 new jobs over the month. Locally the Australian economic data has not been too flash either, as Building Approvals fall and although Private CAPEX numbers were better than last month they were still well below economists forecasts. Looking ahead, next Tuesdays RBA meeting is therefore set to be a damp squib with interest rates held at 1.5% again and no sign of a move for quite a while. Instead we'll look to local Retail Sales, GDP and Trade Balance numbers as sparks to cause a push through towards my target of 77c, being the technical 200 Daily Moving Average and so medium to longer term fair value.

 

 

AUDEUR: Politics have played a big part for this pair as both the Italian and Spanish Governments are on shaky ground. There has been no economic data of note from the European continent and none due next week either, so local numbers will be key. Tedhnically we sit at the 50% retracement of the sell off seen since last July and so we'll really need a solid political or economic catalyst to push us through the 65c area. In the meantime, buyers and sellers should be relatively happy around here.

 

AUDGBP: The pound is also suffering, trading around highs not seen since late January. Last Monday was a bank holiday and the only economic data release comes this evening in the form of manufacturing PMI. That is expected to show a fall from last months read and technically the 50% retarcement of the sell off sicen August last year comes in around 0.58and so a good target for those looking to pay those UK generated invoices. as per last weeks message, I do target 0.60 further out and once there I'd suggest we look at hedging a fair portion of any future exposure.

 

Jim Devonport

E: jim.devonport@finport.com

M: 0415 066 468 


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