News and Market Analysus from FIBO Group - 2016

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Aussie dollar continues to fall

The Australian dollar has continued its downward spiral in late trading today, following on from yesterday’s tumble after a hawkish stance from the US Federal Reserve.

At 6.40pm (GMT) the Aussie dollar was trading at US73.60c down from US74.03c in yesterday’s trading.

The Australian dollar initially began to fall yesterday after the Fed expectedly raised rates but it was the following monetary statement that caught investors of guard.

US Federal Reserve President Janet Yellen noted in her speech that the central bank is poised to lift rates 3 times next year which was more than analysts expected, and as a result the Australian dollar accelerated its losses.

"Every analyst was picking that the Fed would hike, so that was absolutely no surprise, but what was a little bit more illuminating was the change in their forecast for the Fed funds rate in 2017," said NAB senior economist David de Garis.

Strong employment numbers out of Australia today may have saved the Aussie dollar from further and pain, with the local economy creating 39,100 new jobs of which most were full time.

The unemployment rate, although below expectations, also came in strongly hitting the market at a healthy 5.7 percent.

The news may take some pressure off the RBA to cut rates in the nearest future.

"The leap in employment provides further evidence that the fall in GDP in the third quarter was a blip rather than anything more worrying," said Capital Economics economist Paul Dales.

FIBO Group representative
Euro US dollar parity just around the corner?

The Euro has come under renewed pressure today on the back of 2 terrorist attacks yesterday that rocked the European continent and sent investors flocking to safer currencies such as the US dollar.

At 12.39pm (GMT) the Euro was trading at $1.359 against its US counterpart down from $1.399 in yesterday’s trading.

A Christmas attack on a market in Berlin yesterday by an Afghani national left 12 people dead and many more injured has raised concerns about German chancellors Angela Merkel’s decision to allow over 1 million refugees into Germany.

"For now, there is little we know about this deed with certainty, but given the current information we have, we have to assume we are dealing with a terrorist attack," noted German chancellor Angela Merkel.

"I know that it would be particularly hard to bear for all of us if it was confirmed that the person who committed this crime had asked for protection and asylum in Germany." She added.

Also adding to the tensions was the Assassination of the Russian ambassador Andrey Karlov yesterday in Ankara which threatens to once again break open relations between Russia and Turkey.

The European currency has now fallen in 5 of the past 6 trading sessions is threatening to fall to a 14 year low with some now predicting that we may be just weeks away from parity with the US dollar.

Analytic FIBO Group

FIBO Group representative
Pound gives up gains

The British pound has pulled back sharply today after making its biggest 1day gain in nearly 20 years’ yesterday, as fears once again crept in about where Brexit will lead to.

At7.48pm (GMT) the British currency was trading at $1.2280 against its US counterpart down 0.94 percent from yesterday’s trading.

Although British Prime Minister Theresa May laid a clear path out yesterday for the UK to exit the European union, not everyone was convinced and claim there are still many unknowns on the road ahead.

“Aftertaking the top spot in the G10 currency space on Tuesday, the pound is the worst performer so far today. After the rapturous reception to Theresa May’sspeech, today sterling traders may be taking a finer look at the detail, and concerns may start to arise about Theresa May’s tough line on Europe, saying that she would prefer no deal, rather than a bad deal with the EU after Brexit”.wrote Kathleen Brooks, the research director at spread betting firm City Index,

“This is a key reminder that the pound’s sensitivity to politics is alive and well,and volatility is here to stay.” She added.

Just how far the pound will pull back now is open for debate but some predict that the currency will be back down below $1.20 before too long, but the worst is behind us.

“My sense is that weare going to challenge the $1.20 level before too long again, and 1.15 is not out of the question, but there won't be the kind of weakness for the pound that we saw in the second half of last year," noted Asset manager GAM's group head of multi-asset portfolios, Larry Hatheway.

Analytic FIBO Group