Today is Sun, August 20, 2017 7:20:01 GMT
RSS Follow Us Follow us on Twitter Friend us on Facebook
Currencies AUD Compass Directions Afternoon Report Tuesday, 20 December 2011

The RBA Monetary Policy Meeting minutes released today showed that the bank believes that an “investment boom” is coun-tering the negative effects of the European debt crisis. The minutes showed that the bank saw no “strong need” to lower rates at its meeting in early December but did so due to the “possibility of a very sharp contraction” in Europe. Traders bought the Australian dollar from 0.9892 to as high as 0.9942 as the chances of further aggressive rate reductions by the RBA fell. De-spite being the only G10 nation to avoid recession in 2009, Australia is still headed for its worst annual jobs growth in 15 years.

The situation in Europe will continue to weigh on investor sentiment and the focus will remain on further comments by the ECB President, the credit markets and bond yields for Eurozone nations. The EUR has firmed marginally to above 1.3000 while the USDJPY traded in a 10 point range.

Asian equity markets made modest gains as South Korean shares pared their losses from yesterday’s falls triggered by the death of Kim Jong Il. The Hang Seng is higher by 0.54% to 18,168 while the Nikkei is up 0.45% to 8,333. The ASX 200 has closed down 0.18% to 4,053.

Commodity prices have firmed today in subdued conditions as traders were more interested in the festive season than anything else. WTI crude firmed by 0.4% to $94.25 as geopolitical risks on the Korean peninsula and the Middle East rise. Precious metals were mixed with gold higher by 0.14% to $1,599 while silver has fallen 0.1% to $28.85. Soft commodities were mixed while copper has lost 0.23%.

GOLD continues to consolidate with the price trading in a relatively orderly manner within a $1,589 and $1,602 range and closes the afternoon at $1,597. ECB President Draghi’s comments about the state of the European economy did not have the same impact as they did on the US markets as much of what he had said was clearly apparent to all. The subdued trading conditions have allowed the gold price to stabilise and we expect that the price should head higher over the next session to above $1,600. We remain bullish in the short term and will be looking for a price move towards $1,640 before we change our medium term view to bullish. Critical support remains at just above $1,532 and we will be keeping a close eye on this level if the gold price does in fact fall towards this level. A break of $1,530 would be a highly bearish signal for us. Look for support at $1,587 and resistance at $1,601. Short term higher risk tolerance traders could look for a $10 bounce from current levels.

AUD/USD opened the Asia morning down below 0.9900 as the US afternoon bearish tone controlled on the comments about Draghi limiting ECB purchases of bonds.  However, bottom picking names and the bullish expectations from the RBA, stating it was a close call for the reduction of rates at the December meeting taking the shine of the markets expectations of a continued interest rate slide during the New Year! We now close out the afternoon with the price bouncing to be at 0.9937 in slow and illiquid volumes.  Is hard to know what the European and US markets have in store for the little Aussie battler!  However, we still lean towards the downside as we see risk being taken off the table, heading into the holiday and New Year period.  0.9860 is still the level it needs to break for the pair to again restart the momentum which was seen early last week and the week before.  However, we do fear a short squeeze towards 1.0025 if the downside doesn’t come soon.

 

DISCLOSURE AND DISCLAIMER
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 www.compassmarkets.com 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