Today is Wed, July 26, 2017 6:33:53 GMT
RSS Follow Us Follow us on Twitter Friend us on Facebook
Currencies AUD Market Outlook for February 2, 2012

Recap of the Latest Global News
By Cory Vi & Andrew Su on Feb 2, 2012

Yesterday, manufacturing strength around the globe from prompted a rally in the markets as investor focus was diverted from the European debt focus. Manufacturing data in the US grew at the fastest rate in seven months while manufacturing in the United Kingdom rose to an eight month high. Gauges of manufacturing in China also improved and manufacturing in Europe contracted less than expected. Manufacturing in China showed a modest expansion beating market expectations of a contraction. The USD weakened across the board and Treasuries stopped a five day rise. with The EUR is trading at 1.3130 while the GBP is currently trading at 1.5830.

Further aiding the positive market sentiment is the expectation that the Greek private sector debt swap deal and the nation’s second financing deal will be completed in the next few days. However, the longer the negotiations drag on, the greater the likelihood of an extended fall in the Euro. The strongest performers  yesterday were the risk currencies. The Australian dollar has surged past 1.0700 while the Canadian dollar is once again trading above parity against the USD.

Equity markets powered ahead yesterday spurred by signs of manufacturing strength globally. The S&P 500 closed 0.9% higher at 1,394 with financial and commodity stocks leading the gains. Morgan Stanley rose more than 5% on news that it had won the lead manager role for the upcoming Facebook initial public offering. The appliance maker, Whirlpool, rose almost 20% as it projected higher than expected earnings. Asian stocks gained with the Hang Seng rising 2%. European stocks have lost earlier gains, falling from 6 month highs, as oil producers fell

 

Commodities News

 

Commodity prices moved lower yesterday with the CRB index losing 0.78 points to 311.53 with strength in the equity markets failing to spark a rally. WTI Crude continues to fall, down another 0.8% to $96.75 after the US Energy Department reported higher than expected inventories and gasoline demand fell to a 10 year low. Precious metals consolidated with gold steady $1,748 while silver has lost 0.7% to $33.57. Soft commodities were mixed while copper has given up 0.8%.

 

GOLD

 
GOLD continues to show strong price con-solidation to gain slightly to hold above $1,740. The range yesterday was $1,733 to $1,751. As we had expected gold had an attempt at the $1,750 resistance level a couple of times before easing back slightly to $1,743 this morning. The market is eyeing critical resistance just above $1,800 before a charge towards the all time high just above $1,900. Our end of second quarter target of USD2.000 on gold remains firmly in play. Gold is showing good price consolidation at the moment and a break out appears immi-nent. Nothing has happened overnight so we maintain our strongly bullish stance on gold in both the short and medium term,. We continue to hear of central bank diversification into the metal which continues to support and drive the price higher. Today, there will more than likely be a lull in liquidity and tightening of trading ranges as the market awaits tomorrow’s release of the US non farm payrolls data.

FX News

 

EURUSD

EUR/USD started the day in London paring gains made yesterday after better manufacturing data eased worries about global growth.  The market was quite subdued until Chinese Premier Wen suggested the possibility of more involvement in the developments of the EFSF and the ESM as well as positive comments regarding the shared currency and the euro zone.  This caused the euro to jump 50pips to 1.3198 before drifting back to where it started which was around 1.3130’ish.  It just goes to show the volatility and sentiment of the market hungry for a clear direction.  In the meantime it is quite entrenched within the range of 1.3020 1.3230.  What may determine a breakout of this range will come from surprising data out of the US or solid news about the Greece deal.  The best and only trading strategy may be to play within this range with stops on the breakout.

 

USDJPY

A range of about 15pips, 12 hours into the trading day suggests the nervousness of the market about possible intervention by the Bank of Japan.  Those that are betting on intervention may be buying USD/JPY large just above 76.00 and those that don’t think it could happen are happy to sell at 76.25 on the back of the US not raising interest rates until 2014.  75.31 was where the last intervention happened back in Oct 31 and the market is thinking that BOJ might not come in until 75.50 is tested.  Again Minister Azumi said he is prepared to take firm measures if necessary and that could be interpreted as maybe a solo effort from BOJ if it happens.  Given U.S. Treasury expressed disapproval over Japan’s last solo intervention in October, the market is thinking BOJ may not pull the trigger until 75.30 is breached.

 

AUDUSD

 

AUD/USD was the big winner on the back of the better than expected data over the last 24 hours with equity markets preforming well also. The break above 1.635 top during early Europe trigger weak stops which gave enough fuel to the fire for the price to bounce and takeout the recent 1.0685 resistance. The buoyant markets and the love of AUD on better risk sentiment took the price above the 1.0700 level briefly with the pair topping out at 1.0740. US afternoon profit taking and posi-tion squaring as we lead into the quiet period before Fridays US non-farm Payrolls has seen the price move back to 1.0700 to close out the eventful day. Building Approval and Trade Balance data will make for an interesting morning with both expected to be below the previous. The current level of the AUD will find early morning covering from Australian Importers and with the price already likely to be below 1.0700 the weaker data could see it return to 1.0600 or below quickly.

 
Compass Global Markets

 

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 engaging 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 accurate. 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.