Market Overview by FiboGroup - 2014

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The Australian dollar has clawed back some of its steep losses following in the footsteps of a positive finish on Wall st. The Dow Jones industrial average jumped 221 points, or 1.3 percent, to 17,195. Driving the gains was the announcement by index member visa that earnings had come in above analysts’ expectations and that it plans to begin a substantial share buyback program. Also helping the cause were the latest quarterly GDP numbers out of the US which came in at 3.5% against an expected number of 3% creating a wave of optimism in the currency markets which boosted the Aussie dollars appeal.

Analysts at Fibogroup say that the Australian currency’s party may be short lived as the market awaits a few important indicators for release from the US today Including the Reuters/Michigan consumer sediment Index. The number is up from 80.4 since the start of the year to the latest reading of 86.4, which shows in part that American consumers are opening their wallets. If the reading comes in on or above as expected we could see the Aussie erase its gains as we head into the weekend as traders snap up the US currency.

Market Overview by FiboGroup

 

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Friday 31.10.2014

[video=youtube;qYtmePxvAdA]https://www.youtube.com/watch?v=qYtmePxvAdA[/video]​

Forex daily analysis from FIBO Group.

 

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The Australian dollar finished last week at US87.95 cents sitting at around the same level as the previous week. The Bank of Japan on Friday voted to increase the speed of its quantitative easing, causing the yen to tumble against the US dollar and lending some support to the local Aussie currency. The central bank will spend an around 80 trillion yen per year, above its previous target of 60-70 trillion.

This week will be an interesting one for the Aussie dollar as key statistics from around the globe hit the market starting Tuesday with the latest Interest rate decision from the RBA. Nobody expects any movement in rates and they will remain on hold at 2.5% but the following monetary statement will be eyed closely. Investors will be gauging the banks stance on rising unemployment levels and to what extent they still think that the local currency is overvalued.

Unemployment numbers are due out of the US as well as the latest interest rate decision and monetary statement from the ECB. This latest employment data may confirm the US Federal Reserve’s presumption at last week’s board meeting that things are on the up, especially concerning unemployment. Regarding the ECB statement, traders will pay close attention to the amount of stimulus the central European bank is expected to pump into the economy.

Market Overview by FiboGroup

 

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Monday 03.11.2014

[video=youtube;6prRN8Q1SnM]https://www.youtube.com/watch?v=6prRN8Q1SnM[/video]​

On Monday, traders will pay close attention to the release of the PMI manufacturing Indexes from Europe and the US. The number from America will be of particular importance as it may give traders a clear signal about the direction of the US economy.

Forex daily analysis from FIBO Group.

 

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Since hitting, a high of US89.10 cents last Wednesday the Australian dollar has been in free fall after the latest fed meeting and finally broke down through the US87.00 cents mark to trade at around the US86.90 cents today. The American central bank retreated that they were satisfied with the labor market and even though Inflation has not reached their projected target things were still on the up. The final straw for the Australian currency was last night’s better than expected manufacturing figures from the US which came in well above expectations at 59.00 against a consensus of 56.2 adding another notch in the recovery of the American economy.

The RBA is due to release their latest Interest rate decision tomorrow but this may be overshadowed as all eyes are glued to the Melbourne cup, the horse race that stops a nation. The local currency might take a breather and wait for Wednesday when more key statistics are due to hit the market.

Market Overview by FiboGroup

 

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Tuesday 04.11.2014

[video=youtube;Q-nUMPnBOTs]https://www.youtube.com/watch?v=Q-nUMPnBOTs[/video]​

The Reserve Bank of Australia will announce their latest interest rate decision. Although we don’t expect any changes from the current rate of 2.5% Investors will pay close attention to the monetary statement from the bank concerning their stance on rising unemployment levels and to what extent they still think the local currency is overvalued.

Forex daily analysis from FIBO Group

 

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The Australian dollars is range bound today trading at around US87.17 cents at 5.11pm (AEDT) down from US87.37 cents yesterday. The currency has been drifting upwards since the latest Interest rate decision from the RBA where the rates where left on hold at 2.5% like most Analysts expected.

In his following speech, Governor Glen Stevens mentioned, “the exchange rate has traded at lower levels recently, in large part reflecting the strengthening US dollar”. He also noted that “its above most estimates of its fundamental value, particularly given the further declines in key commodity prices in recent months”. He also used one of his favorite catch lines to note that the Aussie dollar was “high by historical standards”.

In a sign that a cut in the Australian benchmark Interest rate was off the table in the foreseeable future Governor Stevens finished up by referring to a “period of stability in interest rates”.

“In the Board’s judgment, monetary policy is appropriately configured to foster sustainable growth in demand and inflation outcomes consistent with the target,” the statement said.

Other news that helped the local currency stay afloat above the US87.00 level was positive retail sales data released yesterday which came in at 1.2% against a consensus of 0.4% which shows from a consumer spending side the economy is ticking along.

Late yesterday evening the latest quarterly employment numbers from New Zealand came in at 5.4% dropping from 5.6% in the last quarter, which will give the Kiwi central bank food for thought about rate movements at its next monetary policy meeting.

Market Overview by FiboGroup

 

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Wednesday 05.11.2014

[video=youtube;xosXfHyLWRs]https://www.youtube.com/watch?v=xosXfHyLWRs[/video]​

On Wednesday, we will see the release of retail sales figures from the Eurozone and the ISM non-manufacturing Index from the US. The number from the US is a key indicator of overall business confidence and traders will be hoping for a positive number for confirmation of a recovering US economy.

Forex daily analysis from FIBO Group.

 

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Ever since hitting an all-time high of US1.1079 cents in July 2011 the Australian dollar has dropped more than 20% to touch a four year low of US85.52 cents. What was once a darling of the currency markets has become an outcast as falling commodity prices, a recovering US economy and a slowdown in China have all take its toll on the currency. Australia’s biggest commodity and export, Iron ore has been one of the biggest drags on the Aussie dollar falling from US180 dollars a tonne to around US80 dollars yesterday.

It seems there is a negative vibe surrounding the Australian dollar at the moment with Analysts scratching their heads as to how far it will fall with some saying it should return to its long-term average of between 75 and 80 US cents as the US starts raising interest rates.

One of the most pessimistic forecast is coming from Deutsche Bank's chief economist for Australia Adam Boyton who notes the dollar could face a "benign collapse" to US66¢ by the end of next year as a result of falling commodity prices, mining investment and reduced government spending. The fall in the Australian dollar to the mid-US60¢ would “come about if the Reserve Bank keeps interest rates on hold until 2016, if the US lifts its rates by mid-2015 and if the United States' dollar continues to strengthen “ Boyton said.

Yesterday’s news that the Republican Party had taken control of the US Senate in midterm elections claiming a majority in both chambers of Congress is seen as another blow for the Aussie dollar. Republicans are perceived to be more business friendly, and against a prolonged period of low interest rates. This may just be the catalyst for the US to lift Interest rates sooner than expected.

Market Overview by FiboGroup

 

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Thursday 06.11.2014

[video=youtube;g-D7XsIPjos]https://www.youtube.com/watch?v=g-D7XsIPjos[/video]​

Forex daily analysis from FIBO Group.