Today is Sat, September 23, 2017 0:25:11 GMT
RSS Follow Us Follow us on Twitter Friend us on Facebook
Currencies AUD Compass Directions Afternoon Report Wednesday, 21 December 2011

Markets continue to be buoyed by the better than expected data releases out of the US and Europe last night. A fall in Spanish borrowing costs at a successful bond auction overnight has also given investors hope that the situation in Europe is stabilising. The broad increase in risk appetite has seen the Dollar index fall by 0.2% and the EUR advance to above 1.3100.

Loans from the ECB to banks throughout Europe announced in early December by ECB President Draghi will commence tomorrow. In news outside of Europe, Chinese Premier Wen Jiabao announced his support for exports by stabilising policy surrounding exports and providing capital to small companies. The change in market sentiment has seen the Korean Won and Australian dollar advance strongly. The AUD closes the afternoon above 1.0140.

Asian equity markets have been boosted by the strong data releases out of the US overnight and Chinese Premier Wen an-nounced his support for the export market. The MSCI Asia Pacific has gained 2% with seven shares gaining for every one that fell. Taiwan’s Taiex (TWSE) was the best performing Asian stock market rising more than 4%. The Hang Seng is higher by 1.6% to 18,639 while the Nikkei has gained 1.28%. The ASX 200 has closed 2.13% higher at 4,139.

Commodity prices continue to firm in Asian trade. WTI crude has advanced another 0.71% to $97.93 on continuing concerns over supply issues related to Iran and speculation about falling stockpiles in the US. Precious metals also gained with gold higher by 0.55% to $1,626 and silver gaining 0.4% to $29.65. Soft commodities broadly gained while copper is up 0.25%. Overnight, look out for the the UK MPC Meeting Minutes, US Existing Home Sales and the US Crude Oil Inventory report.

GOLD has benefitted from a decisive return in risk appetite precipitated by strong US data overnight and falling yields in European bonds.  The range today has been $1,615 to $1,628 and is closing the afternoon near the session highs.  As we had expected the price continues rise and consolidate and a test of major resistance just above $1,640 is imminent. If equity markets can maintain the gains seen over the past few trading sessions we see a test of this level in trade overnight.  On a break and close above $1,640 we will change our medium term outlook on gold to bullish. A Christmas rally in equity and commodity markets should see gold easily breach this level as price momentum continues to build after last weeks significant price falls.  Although any increase in geopolitical tensions in Iran and Korea may have a negative impact on equity prices, we believe that a rush to gold as a tradition safe haven is likely. Support can be found at $1,608 with initial resistance at $1,629.

AUD/USD has continued with the bullish tone that was shown during the European and US session yesterday as the market is currently being controlled by leverage accounts and talk of interbank traders hunting EURAUD stops below the January 20111 report lows at 1.2910.  There was a jump during the morning session as the Australian Data was better than the previous and with the spot market knowing it had full control the end result is more stop hunting with the price somewhat over jumping our 1.0130 expected top.  The head of steam which the pair currently has is going to be hard to stop and we could also be seeing some of the M&A buying we were talking about early last week in the current flow mix. Should this continue its hard to see the AUD heading back towards parity anytime soon. However, for now if we had to trade we would be selling into the current spike or looking towards the EURAUD cross with the idea of buying Euro.


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