Today is Sun, October 22, 2017 12:07:23 GMT
RSS Follow Us Follow us on Twitter Friend us on Facebook
Currencies AUD Compass Directions Afternoon Report Tuesday, 29 November 2011

European finance ministers will meet again tonight to try to formulate a plan to boost the European Financial Stability Fund. Speculation of some sort of an announcement that will address the debt crisis head on saw risk appetite rise throughout the day. Although the market was buoyed by potential actions and plans out of Europe, the reality was more sobering. The OECD warned that the Eurozone is more than likely already in recession and that the crisis there may drag the entire world into recession. The EUR is closing the Asian session near the day’s high at 1.3370.

Furthermore, unemployment in Japan surged to 4.5% much higher than median expectations of 4.2%. Major Japanese cor-porations have been cutting jobs as the strength of the yen erodes profits and the country continues to struggle to recover from the March earthquake. The Australian government announced that it will cut almost $7 billion in spending to meet a promised budget surplus as the European debt crisis. The announcement placed some pressure on both the Australian dollar and equity markets. However, as the EUR climbed in the afternoon, the AUD is now trading at its highs of the day at 0.9970.

Equity markets gained for the second day following the lead from the strong US markets in the wake of speculation that Eu-ropean ministers are planning to announce another plan to stem the debt crisis. The MSCI Asia Pacific is up more than 1% with three shares climbing for every one that fell. The Index is still down 7.8% for the month of November. The Nikkei gained 1.32% to 8,397 while the Hang Seng rose 0.46% to 18,121. The ASX 200 closed the day higher by 0.62% to 4,083 after initially falling on the back of the Gillard government’s budget cuts. Banks and energy stocks performed well both ris-ing more than 1%.

Commodity prices eased slightly despite the positive moves in equity markets. WTI crude fell by 0.7% to $97.55 on expecta-tions that gasoline stockpiles may have increased in the US. Precious metals consolidated with gold relatively flat at $1,714 while silver eased 0.83% to $32,00. Soft commodities eased while copper was flat for the session. Overnight, we have the release of the high impact UK Nationwide House Price Index and US consumer confidence.

GOLD consolidated in Asia trade today as profit taking set in after the recent rally up from $1,665 but big gains are still yet to be seen and we should trigger these in the coming sessions as further USD weakness is seen. Commodities were broadly unchanged in Asia as we await European trade and US data tonight. Gold traded in a $1,706-13 range and finished the session unchanged at $1,713. A slow and quiet grind in Asia for precious metals today as we were ultimately directionless on the day as liquidity remained thin and traders await the reaction in Europe this morning after such big gains last night. We may see some initial selling pressure as European equities struggle at the open but we expect support towards $1,700/02 to limit any losses and for a bigger move higher targeting $1,21 initially and then $1.735. We continue to say that gold is going to see a big move higher soon and get ready for this as it will take prices all the way back for a test of major resistance at $1,800. We remain a buyer of dips towards $1,690 with stops just below $1,675 for now. We target $1,750 this week but ultimately a close above here and we could see some big gains. Watch the Euro and US consumer confidence for direction tonight as a rise in the Euro should trigger big gains.

AUD/USD opened the Asia session with the price around 0.9885 which was the previous Asia session high and from the outset the overnight bid tone came back into the price with the pair finding buyers from caught exporters that can’t wait any longer for the AUD to fall.  The price managed to briefly touch 0.9922 before quickly coming off as the Australian Government budget has a $20bio black hole.  Cuts to spend has been taken from the markets as a negative due to the fragile stat of the economy and likely expectations that China will slow causing more problems for government spending. We now close the day with the price near the highs of the day as the AUD tracked the EUR higher. Whilst we have been looking at 0.9860 over the last 24 hours the 0.9800 support is quickly growing in importance for the medium term bears. A break confirms the path is still in play but a move back towards and possible break of parity could be the start of a longer term squeeze to the 1.03/04 area.


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