Today is Tue, October 17, 2017 20:31:42 GMT
RSS Follow Us Follow us on Twitter Friend us on Facebook
Currencies AUD Compass Directions Afternoon Report Friday, 18 November 2011

Interbank traders targeted stops below parity in the Australian Dollar during the local morning as the signs of a fragile market on the back of weak overnight commodity moves put the fear into the commodity currencies. The minor support at 0.9980 was taken out with the price managing to reach 0.9970 before sovereign names were seen buying across most markets and with that the downward spiral was stopped in its tracks. The following short squeeze has all currencies higher with Euro touching 1.3500 after having found support at 1.3450 earlier in the day whilst Sterling could not move above the reported 1.5800 corporate sell-ing. Reports that Merkel and Morti were holding discussions over the current Italian crisis via phone seemed to help the bullish mid session bias of the market but as the afternoon approached all the majors gave up there gains with AUD back at parity, Euro 1.3475 and Sterling 1.5770.

Reports out of Japan that Toyota would not be able to make a profit on US car sales whilst the Japanese currency was below 90.00 has done nothing to stop the strengthening of the Yen as the pair closes the day just above the next pivot point of 76.80. Reports that stops below in the Interbank market are increasingly becoming a target and we can’t see a bounce for the USD until these are cleaned out.

Equity markets remained under pressure through the Asian trading session today as the negative sentiment seen in Europe and the US flowed into the region today. Negative comments about the property sector in China today didn’t help either and saw China’s Shanghai Composite weaken by 1.50% to 2,425 and Hong Kong’s Hang Seng lost 1.80% to 18,476. South Koreas KOSPI also came under pressure and is generally the leader or loser in the Asian markets, currently weaker by 2.20% at 1,834. Australia’s ASX 200 performed inline with other major bourses as commodity prices remained weak and the AUDUSD dollar continued to fall. The ASX 200 finished trade weaker by 1.90% at 4,177.

Commodity markets were directionless today with early losses seen as equity markets opened and moved to session lows very quickly but we did see some support return in afternoon trade as shorts were seen covering going into the weekend. Crude prices were relatively unchanged with WTI weaker by 0.10% at $98.70 and Brent crude actually gained 0.20% to $108.41 as the spread narrowed slightly after recent losses. Precious metals remained under pressure with Silver declining by 0.40% to $31.37 and Gold finished the session unchanged at $1,720. Copper was relatively unchanged ending the session at $3.40.

GOLD consolidated in Asia today after steep losses were seen in offshore trade as negative sentiment creeps back into the markets. We saw early losses reversed as US equity futures bounced off the lows and the USD lost some of its earlier strength.  Gold traded in a $1,710-26 range and finished the session unchanged at $1,720. IT was a positive day for Gold as we didn’t see a test on major short-term support at $1,695 and we managed to push up towards session highs going into the close as buyers slowly start to return to this market after the sell off from $1,800. Major support at $1,690/95 should hold so we place stops on longs just below here as if we close below this level tonight then we are headed much lower, back towards 41,580-$1,600.  We continue to say do not get sucked into the bears view that there will be an all mighty sell-off as it is just not going to happen with all the uncertainty in the world right now and the printing presses will add inflation to the markets in time. Solid offers are seen towards $1,735 and then solid resistance lies at $1,750. Back above here and we should move to $1,777 initially and then $1,800+.

AUD/USD was taken lower during the local morning as equity markets took the negative overnight lead with directional drive coming from a weaker Gold price. Stops below the parity level were to close for the morning market not to trip and with the minor support level at 0.9980 being breached you would have thought the slide would have had the pair closing below 0.9950. However, with Friday markets doing there normal think after risk off saw bears square up for the day with range trading names jumping on the offers causing a squeeze that was to take AUD to 1.0040 quite quickly.  Afternoon squaring on the other side has the pair back to almost close the day mid range at parity. We are still sitting on the overnight shorts and will continue to watch the markets bias or lack of bias as to an exit point. We have been looking towards the 0.9945 level as an exit but the Asia session looks more like the charm before the storm to us. Low liquidity and position squaring will be the driver into the weekend.


Compass Global Markets Pty Ltd (“Compass Global Markets”) ACN 144 657 885, Authorised Representative No. 377377, is a Corporate Authorised Representative of Calibre Investments Pty Ltd (Australian Financial Services License No. 337927). Please refer to the Financial Services Guide which is available through our website for more information regarding the financial services that we offer.
All references to prices, amounts and currency are in Australian dollars unless otherwise noted.
This report is provided for Australian residents only and is not intended for use by residents of any other country.
GENERAL ADVICE WARNING: The advice provided in this report has been prepared without taking into account your particular objectives, financial situation or needs. You should, before acting on the advice, consider the appropriateness of the advice having regard to these matters and, if appropriate, seek independent financial, legal and taxation advice before making any financial investment decision.
This report has been prepared for the general use of Compass Global Markets clients and must not be copied, either in whole or in part, or distributed to any other person. This report and its contents are not intended to be construed as a solicitation to buy or sell any security, product or asset, or to engage in or refrain from en-gaging in any transaction.
Compass Global Markets does not guarantee the performance of any investment discussed or recommended in this report. This report and the information used within may include estimates and projections which constitute a forward looking statement that express an expectation or belief as to future events, results or returns. No guarantee of future events, results or returns is given or implied by Compass Global Markets. Such statements are made in good faith and based on reasonable assumptions at the time of publication. However, such statements are also subject to risks, uncertainties and other factors which could cause actual results to differ substantially from the estimates and projections contained in this report or otherwise provided by Compass Global Markets.
Any information referencing past performance is not indicative of future performance. All information in this report has been obtained from sources believed to be accu-rate. Compass Global Markets does not give any representation or warranty as to reliability, accuracy or completeness of information contained in this report and therefore all responsibility is expressly disclaimed, whether due to negligence or otherwise. The information presented and opinions expressed in this report are given as of the date hereof and are subject to change without notice. We hereby disclaim any obligation to inform you of any changes after the date hereof in any matter set forth in this report.
Global Compass Markets, its affiliate and their employees may hold positions in the financial products, or securities or derivatives of, in the companies referred to in this report from time to time.
Analyst Certification: The views or opinions expressed in this report accurately reflect the personal views of the analyst(s) and no part of the remuneration of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this report. Any views or opinions expressed are the author’s own and may not reflect the views or opinions of Compass Global Markets unless specified otherwise.

Recent posts by forexnews