Market Overview by FiboGroup - 2014

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The Australian dollar touched a new four-year low hitting US85.39 cents before recovering slightly to US85.76 cents at 6.30pm (AEDT) after the latest monetary statement from the RBA. In what is becoming a common theme in each of their monthly statements the Bank retreated again their concern about the level of the Australian currency.

“Despite the recent depreciation of the exchange rate, the Australian dollar remains above most estimates of its fundamental value, particularly given the further declines in key commodity prices over the course of this year,” the bank announced.

They also mentioned that money flowing in from Japan “could hold the Australian dollar at a higher level than real economic fundamentals would imply,”
Australia’s unemployment currently sits at 6.2% with the central bank predicting the outlook to be grim. “The participation rate is low and business surveys and liaison suggests that labor is readily available,” it said. “A sustained decline in the unemployment rate is not expected for some time.”

Later today will be the release of the latest non-farm payrolls data from the US which analysts predict will show a number of more than 200,000 confirming the American economy is steaming ahead. The latest unemployment rate will also hit the market with an expected number of 5.9% showing the jobless rate at a 6-year low with the potential to put added pressure on the Australian dollar.

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Friday 07.11.2014

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Forex daily analysis from FIBO Group

 

[fibogroup.com]

The Australian dollar continued its climb on Monday carrying on from last week’s strong finish as disappointing job numbers out of the US came in well below analysts’ expectations. The Australian dollar is trading today at US86.73 cents up from US86.33 cents on Friday. US non-farm payrolls came in at 214,000, against expectations of 235,000 ending a strong run of recent robust employment data and bringing to a halt the recent surge of the greenback. The unemployment rate dropped slightly to 5.8% from 5.9% but this was unable to halt the US dollars slide

“Friday’s disappointing US jobs report sent the US dollar reeling and lifted the Aussie back towards the 86.60 barrier,” FXCM market analyst David de Ferranti said.

Despite the weak headline numbers, the US jobs report contained some encouraging elements, Mr de Ferranti said, implying the weakness will not last long.

Also underpinning the Aussie dollar’s gains today were CPI numbers out of China that came in at 1.6% unchanged from the previous month. The number has seemingly found a bottom after falling from 2.5% since the start of the year, which had Investors worried about a slowdown in the Chinese economy.

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Monday 10.11.2014

[video=youtube;fPxOOU4h2U4]https://www.youtube.com/watch?v=fPxOOU4h2U4[/video]​

On Monday, all eyes will be on the Asian session as the latest CPI numbers are released from China. The figure has fallen from 2.5% since the start of the year to last month’s reading of 1.6% which clearly shows a significant slowdown in the Chinese economy. The consensus for this time round is also a number of 1.6% with anything lower expected to put serious pressure on the Chinese Yuan and the Australian dollar.

Market Overview by FiboGroup

 

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[video=youtube;65Lc5ubn0Jc]https://www.youtube.com/watch?v=65Lc5ubn0Jc[/video]​

This week’s trading will be closely monitored as key statistics hit the market such as the CPI numbers and Industrial production from China, Industrial production from Europe and the latest Inflation numbers from the UK, which should create volatility in the Euro. We will also see the latest retail sales figures from the US, which may show a continuation of a recovering US economy.

 

[fibogroup.com]

The Aussie dollar is trading around US86.20 cents today virtually unchanged from yesterday as positive real estate and business data hit the market putting a floor under the local currency. The latest quarterly housing price Index which shows the changes in house prices in major capital cities came in at 1.5% right on consensus and showing that the property market is still powering along even though it is at an all-time high.

The NAB’s business conditions survey Index jumped from a number of 1 to 13 reaching its highest level since February 2008 and shows consumers and businesses are still not shy to spend money and that the Australian economy still has some life left in it.

Claiming that the jump in business confidence was out of the ordinary was an analyst from RBS who noted that “The very strong rise in the business conditions index looks possibly even at odds with other indicators on the state of the Australian economy,” said RBS’s Gibbs. “That’s giving the Australian dollar some support.”

The market expects a quiet day today with the Aussie currency remaining range bound due to the lack of key data to hit the market. There may be some movement later in the day as Glen Wheeler, the governor of the Reserve Bank of New Zealand gives his latest monetary speech, which may create some volatility in the Kiwi currency and in turn filter on down to the Australian dollar as the two countries are closely connected.

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Tuesday 11.11.2014

[video=youtube;QoeCSK1PiGk]https://www.youtube.com/watch?v=QoeCSK1PiGk[/video]​

Tuesday may see traders take a break due to public holidays in the US, France and Canada and also a lack of key statistics. There may be some interest in the monetary speech by Bank of New Zealand governor Glen wheeler about the state of the NZ economy, which could affect the direction of the Kiwi and Aussie dollars.

Market Overview by FiboGroup

 

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The Australian dollar broke through US87.00 cents before pulling back and settling around US86.80 cents at 4.35pm(AEDT) as strong local data gave the currency a boost. The Westpac Consumer Confidence Index came in at 1.9% up from last month’s number of 0.9%, challenging analysts who have written off the Australian economy claiming it was headed for a downturn.

This strong figure is evidence that consumers are not feeling the heat from the recent decline of the local currency and are still prepared to open their wallets in the lead up to Christmas and the New Year claim Analysts from Fibogroup.

The Aussie dollar also rallied against the Japanese currency, breaking through the 100 yen mark for the first time since May 2013, after speculation swirled that Prime minister Abe of Japan may call snap elections by the end of the year to push through changes and increase the countries sales tax to 10%.

“The idea is that he would go to a snap election to make sure he has still got a mandate to continue with the policies of Abenomics,” said Sam Tuck, senior foreign exchange strategist at ANZ Bank New Zealand. “The markets appear to have taken that one directionally, that he will get the mandate which will increase their ability to enact the difficult policy reform that is necessary for the rebalancing of the Japanese economy. All the political commentators are saying that it is a good time to go and a good time to cement and increase gains.”

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Wednesday 12.11.2014

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Market Overview by FiboGroup

 

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The Australian dollar is trading at around US87.00 cents today down from yesterday’s close of US87.17 cents after the RBA said that Intervention to bring the currency lower could not be ruled out.

RBA assistant governor Christopher Kent stated intervention to bring down the “too high” exchange rate was not off the table.

“He mentioned that “its above most estimates of its fundamental value, particularly given the substantial declines in commodity prices over the course of this year”.

Industrial production figures from China today came in at 7.7% against a consensus of 8% and once again showing that there are cracks appearing in the Chinese economy. This doesn’t hold well for the Aussie dollar because any slowdown in the Chinese economy is going to have a knock on affect in Australia as China is the country’s biggest trading partner.

“A continuation of such poor data can only pressure the Aussie dollar,” claim analysts at Fibogroup

“Any slowdown in China will only reduce demand for Imports into the country which Includes Australia’s largest export Iron ore which is already sitting at a six year low”

Market Overview by FiboGroup